Suboptimization and Values

Examples like Mr. Ashwell and New Hampshire Medicaid may not show a callous disregard for the needs of people in order to reduce costs. In the New Hampshire example, the overall program paid much more than the cost of the denied prescriptions. More likely, the cause of problems like Mr. Ash-well's death is a misguided effort to control one part of the health care mix at the expense of others. (Such decisions are called suboptimization.) By now the point may be clear enough, but it seems elusive to so many managed care executives that it may bear a bit more discussion.

Trying to save money on one component of health care (say drug products and managing drug therapy) may be likened to a building contractor using cheap cement. It is likely that some walls, etc., will fall down or that more jobs will have to be done over sooner than they would if the job had been done correctly the first time (analogous to preventable adverse outcomes and treatment failures). The "bargain" work can hurt people, and the total cost can far exceed the savings on that one budget item. The concrete buyer may get bonuses, but the contractor — and his customers — would get inferior outcomes for a higher price.

The cost of drug therapy does not merely add to the other costs of care. The cost of treatment failures (as happened to Donald Ashwell) or correcting treatment failures (as happened to the displaced elderly in New Hampshire) is often much higher than the difference between needed therapy and least-cost therapy.

Perhaps the very first thing that the building contractor should do, to save his company, is change the assignment and especially the reward system for the concrete buyer. Perhaps the very first thing that managed care CEOs should do is integrate the assignment and especially the reward system for their pharmacy benefit managers.

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