Health Care Services: Difficult to Define, Difficult to Measure

In April 2015, President Barack Obama signed legislation that will shift healthcare policy and payments from a “pay for service” model to a model that rewards overall quality and performance. Although this policy will not become effective until 2019, the pressure is on to shift standards of care to ensure that health care services are reimbursed appropriately while providing the best care possible.

Uncharted Territory for Health IT Companies

The pay for performance (or value-based care) model is drastically different from the way health care reimbursement has been conducted in the past. Healthcare organizations now have to show both measurable and positive outcomes in order to be reimbursed for the services they provide. Consequently, healthcare IT companies are faced with the burden of not only helping health care providers develop ways to measure the care they are providing, but also demonstrating how their products enhance the effectiveness that care.

Measuring the Impact of Services versus Products

Healthcare is a service industry. Most health IT companies provide products. Although providers often use products to provide services, most patients recognize that healthcare is a service they are purchasing and not a product.

Lynn Vogel, Ph.D. writes:

“Evaluating whether a specific “service” is “worth it” brings a level of complexity to the transaction that is usually greater than determining whether a product that has been purchased is “worth it.” Products represent a physical commodity, something that can typically be touched, examined at length, viewed against alternatives, and perhaps even used on a trial basis before reaching a final verdict as to whether it has a value commensurate with the payment that is expected. When one purchases a product, whether it is a car, an appliance, food or clothing, it is generally assumed that within a short period of time, the value of that purchase can be determined quite clearly. Not so with many services, and particularly services provided in the health care industry, where value (e.g., becoming less ill or experiencing a complete cure) may take months or years. “

Enhancing the Quality of Patient Care

An effective healthcare IT product must enhance the quality of patient care and lower the cost of providing a health care service. However, the quality of these services is difficult to measure. How can healthcare IT companies be sure that claims of “enhancing the quality of a service” or “lowering the cost” are accurate if the quality of service itself is so difficult to define and measure?

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