How do we define the value of health care?

As payers for much of the health care provided in the U.S., employers clearly have a stake in how the value of treatments is defined. Considering a formulary management approach that removes medicines with prices that exceed a set threshold (i.e., $100,000), a Health Affairs commentary argues that value is not synonymous with "cost-effectiveness" from the sole perspective of the health care system. Among other factors such as patient preferences, the authors state that "the economic value of improvements in productivity or reductions in caregiver burden" should also be given consideration.

Following that definition, when considering formulary thresholds, employers are well-advised to understand the burden of illness on their business in terms of lost work time and impaired performance on the job—and how much lost productivity could be recovered from greater access to higher quality care.

True, there are few instances where improvements to an employee's productivity would exceed the value of a $100,000 treatment. But according to the most current information in IBI's disability leave benchmarking system, avoiding a single disability leave could be worth almost $5,000 in wage replacements for the average claim. That does not count the economic value the employee would have created had they not been absent for a month or two, or the turnover and long-term disability costs if inadequate care contributes to their exit from employment.

As employers continue to grapple with the high prices of prescriptions in their health plans, they must be mindful that unless the productivity benefits of effective treatments are reflected in a formulary threshold, that threshold will deliver suboptimal business value.

Sep 19, 2018|Categories: Blog|Tags: , |