Value-based health care, Part 2. The physician imperative: define, measure, and improve health care quality.

Health care is the only major industry that lacks agreed-upon metrics to objectively define the quality of its products and services. The fundamental deficiency has led to the use of price as the de facto metric for patient contracting. Provider selection defaults to price because quality is assumed to be equal across all physicians and hospitals. This assumption is erroneous and now obsolete. Health care quality can be accurately measured using sophisticated illness modeling techniques that objectively risk-adjust patients level data. Providers' clinical data can be correlated with patient self-assessed outcomes for all episodes of inpatient and outpatient care. Physicians and their hospitals currently managing financial risks and those positioning themselves for these opportunities find such tools and techniques to be invaluable. Credible information creates a power shift away from price-based contracting to a true competitive marketplace that rewards quality of care. Purchasers and patients seek providers who objectively demonstrate their value on both quality and price. Part I of this article appeared in the January/February issue of The Physician Executive.