The Numerator We Keep Dropping
Value-based care is quietly becoming a polite word for cost-cutting.
Becker’s put a sharp question to me recently: is value-based care becoming code for cost-cutting?
My answer hasn’t moved. The risk is real, and it’s structural.
“Value” is turning into a label we paste onto spending decisions rather than a method for delivering better outcomes per dollar.
And the longer we let the word drift, the more cover it gives to a budget exercise that is just dressed up fancy.
Here’s the distinction I keep coming back to.
Cost reduction asks one question: how do we spend less?
Value asks two: what outcome did the patient get, and what did it cost to get there?
That first question: the outcome -> is the numerator. It’s also the part that quietly disappears from most “value” conversations. We get very precise about the denominator, because dollars are easy to count. The numerator is harder, so it gets dropped. And the moment you drop the numerator, you no longer have value. You have a pricing exercise with better branding.
This isn’t a semantic issue!
The definition that actually the field is founded on by Michael Porter is direct: value is the outcomes that matter to patients, per dollar spent, across a full cycle of care.
If outcomes don’t meaningfully improve, value isn’t small. It’s zero. Y
ou can run a flawless cost analysis, prove to three decimal places that one option is cheaper than another, and still have created nothing, because neither option actually helped the patient. Cost-effectiveness and value are not the same thing, and treating them as synonyms is how good intentions quietly become spreadsheets.
Metric Problem? NO!
The standard response to all of this is to go hunting for the One True Metric: the single number that finally captures value and ends the argument. The most recent serious attempt crowns the incremental cost-effectiveness ratio (ICER) as that metric. ICER is a genuinely useful tool. But it can’t be the universal answer, because value isn’t a single question.
Value is a family of questions, and different people are asking different ones, on different timelines, with different consequences:
A payer or guideline committee wants to know which of two interventions to choose. That’s a comparison (ICER)
A service-line administrator wants to know what an episode of care actually costs. That’s cost accounting (TDABC)
A surgeon and patient in clinic want to know whether this operation will deliver meaningful improvement, and at what cost. That’s procedural value indices like the OVI, PVI, and patient-level value analysis live here.
A health system deciding whether to buy the robot wants to know whether the technology is worth its lifetime cost in outcomes not merely whether it pays for itself. That’s a technology question, and it needs more than ROI.
They’re four different questions. This is the heart of a framework I’ve been working through We fall short on the discipline to match the instrument to the question.
The trap is always the denominator
Of those four questions, only one (did the procedure actually improve outcomes, and at what cost?) measures value in the full sense.
The others are essential, but they’re inputs or comparisons, not verdicts.
Cost accounting is where the trap is most seductive. TDABC is the best costing tool we have; it maps where every dollar in an episode goes. But by design, it measures the denominator. It says nothing about whether the patient got better. A system that optimizes its TDABC numbers without ever measuring outcomes hasn’t created value, it has simply gotten very good at spending less. That is precisely the maneuver that lets cost-cutting rebrand itself as value: optimize the denominator, leave the numerator unmeasured, declare victory.
Name the outcome that you BOUGHT!
So when someone tells me we need a better value metric, I’m skeptical.
More slogans won’t fix this. Though I’ll admit they’re getting more creative.
What we need is more honest measurement: outcomes adjusted for cost, for access, for the burden a condition places on a patient’s life.
Name the outcome you bought. Until we can do that, every “value” conversation is really a pricing conversation, and we should at least be honest enough to call it one.
That’s the whole project, really. Measure what we currently ignore.
The scalpel part, most of us get right. It’s the measured part we keep skipping.
More on the domains and framework soon!
#valuebasedcare #costeffectiveness #healtheconomics