2007 Health Care Leaders ForumThe Value Chain Case for Health Care Reform

Detroit Regional ChamberFederal Reserve Bank of Chicago – Detroit Branch

April 24, 2007

Comments by Dean G. Smith, Ph.D.

Professor of Health Management & Policy Senior Associate Dean for Administration, School of

Public Health Director, Center for Value-Based Insurance Design (V-

BID) Board of Directors, Molina Healthcare of Michigan, Inc.

* Opinions are mine alone

Comments: Dean G. Smith, Ph.D.

“The purpose of the health care system is not to minimize costs but to deliver value to patients, that is, better health per dollar spent.”

Porter and Teisberg. JAMA. 2007;297:1103.

Opinions Abound

Selected Health Cost Options

Improving efficiency and reducing unnecessary care: disease management, wellness

Limit medical technology growth

Limit what we pay for services

Cost-sharing, including consumer-directed approaches (increases in out-of-pocket payment)

Improve the value chain

Value-Based Insurance Design

A “Fiscally Responsible, Clinically Sensitive” Approach to Preserve Quality and Contain Cost

Compliance with Statin Therapy Stratified by Mean Prescription Copayment

Ellis JJ. J Gen Intern Med 2004;19:639-646.

$0 to <$10

$10 to <$20

>$20

GovernmentEmployersIndividualsCoalitions

Connection to the Value Chain

Payers FiscalIntermediaries Providers Purchasers Producers

InsurersHMOsPBMs

HospitalsPhysiciansPharmacies

WholesalersMail-OrderGPOs

PharmaDeviceMed

Equip