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Why are you using that metric?

I’ve had several conversations with claims and managed care folks over the last few months about measuring performance, outcome metrics vs process metrics, and the challenges of data collection, aggregation and analysis.

Two takeaways.

Too often the discussion has been too focused on process, too down-in-the-weeds, too concerned about how and what to measure. While process and detail are important, they are secondary to the “why” question.

The most important question is “Why?”

Why are you doing this? Why are you using that metric? Why do you think that is the right metric?

Sometimes I’m a (very) slow learner, but I’ve finally figured out that it is far better to ask those questions than to tell the person what they should be doing. Telling someone something eliminates the chance for them to think through what they have done, why they’ve done that, and if it that was the best thing they could have done.

It forces them to take a step back and question themselves, their assumptions, their pre-conceived notions.

It’s easier – and more ego-gratifying – to tell someone what they should do. I’ve found that this can shift the discussion into a far less productive direction, one where the client may well disagree, to defend what they are currently doing. After all,  to hear someone say what you have been doing for X years is “wrong” will make anyone bristle a bit.

Second, metrics are almost never directly aligned with the organization’s overall goals.

For example, the goal of medical management is to improve the combined ratio.  Has anyone in your organization verbalized that…ever?

If they have, then you:

  • wouldn’t give a rat’s rear end about “savings” or “discounts”;
  • would focus on overall spend;
  • would evaluate providers not on how much of a “discount” they give but on what their services cost and how that compares to other providers;
  • would evaluate networks not on how big their directory is and how deep their discounts are, but on the quality of their providers and the cost of their services.

And that’s just the beginning.

Once you establish the “why” the “what” is pretty straightforward – with one big caveat – every time you settle on what you will measure, go back and see if it aligns with your “why”.

Don’t be surprised if it takes a bit to re-orient thinking. Be patient – with yourself and others. It took me 30+ years, so hopefully you’re a much faster learner.

What does this mean for you?

Asking the right questions requires one to invest time and thought. If you don’t have time to do it right on the front end, you’ll never have time to fix it.

16 thoughts on “Why are you using that metric?”

  1. Boy, is this ever true. I try to keep in mind some wise words from a former colleague: If you can’t readily measure what is important, those things you can readily measure become important. It’s easy to lose sight of that –

    1. Hey Mike – thanks for the note.

      What’s surprising to me – although by now it shouldn’t be – is how prevalent the “how much did we save” mantra is – we’ve all learned that it’s not the savings, it’s the cost…or at least we should have!

      best to you and the family – Joe

  2. Well said because, “If you cannot measure it, you cannot manage it.” which assumes you have chosen appropriate criteria for measurements with which to begin.

  3. Joe,
    Your message is spot on. Seeking “discounts” have blinded many form the really issues of overall cost and quality.

  4. Joe,
    You are spot on. It’s hard to get management to stop focusing on just cost-saving discounts. Note that true discount amounts are not what the employer pays for healthcare, but what the medical provider actually receives. This lack of payment transparency hurts the injured worker, the employer and the provider.
    As you clearly state, the issue is value – the combination of quality, speed, location, satisfaction and price – not prices in a vacuum.
    Take care Joe

    1. Thanks for the note Rudy. I suppose providers would see “discounts” thru that lens, while payers would base the discount on what they paid.

      The transparency thing is an interesting issue. I don’t know what the gas station pays for gas – nor what REI pays for bike parts or Dell for chips. And those entities won’t tell me, which I’m fine with.

      Then there’s the TPA transparency thing which has been going on for decades…most employers don’t seem to care about TPAs making margins on managed care services. Of course that is their prerogative.

      I don’t see how a lack of “transparency” hurts any of those entities – or at least hurts enough to make them do something different.

      Then there’s the question of what exactly “transparency” is…how does one calculate the cost of that service? And doesn’t transparency work both ways – that is, are providers going to come clean on their “costs”? Providers have become quite adept at gaming cost-based reimbursement – look no further than HCA’s margins in Florida.

      be well Joe

      1. Interesting thoughts on transparency, but I don’t think that your example here holds. I can’t shop for a health care service without providing my insurance information to get the “price” but that then dilutes the answer with the negotiated rate, right? I can shop for gas at different stations, get bike parts from different vendors etc. Value for services and paying good providers better makes sense to me.

        1. Hello Leslie – thanks for the note. two separate considerations – one is is the payer issue, the other the definition of “transparency”.

          As you note, in group health the payer is key, as is the benefit design, network status, etc.
          Not so in workers’ comp, which is first dollar every dollar… the patient has no stake in the medical expense. And for the payer, the cost part of the issue is straightforward – what do they pay? Or rather should be…as I’ve noted in MCM ad nauseum, far too many payers think about discounts and not actual cost – and that is just dumb.

          As I’ve also noted here, paying for quality just makes sense – IF there is an objectively valid assessment of “quality”. That is a very different question.

          The definition is key too – who defines it? Seems one’s definition correlates to where you sit in the supply chain – everyone wants their price to be the basis for transparency, but doesn’t want to disclose what their cost basis is.

          be well, Joe

      2. Hey Joe,

        You’re right. Purchasing medical care could be viewed a bit like buying gasoline. You look for the lowest price and expect/assume that most gasoline is the same. The wholesale cost of gas should be not your concern.

        But what if the wholesale supplier was providing an inferior product, mixing in some unwanted ingredients that you did not know about, leading to increased costs of running/maintaining your car? You might not connect the dots.

        That’s what’s can happen in work comp when there is buying and selling of medical care for a hidden profit. When the medical provider (treating physician, therapist, radiologist, etc.) is paid very low wholesale prices, they might not deliver the best, quickest, most efficient care possible for the injured worker. Employers don’t connect the dots to explain their over-utilization, delayed care, higher indemnity payments and more litigation. That’s why Medicare prohibits this practice. At least in work comp, the employer should know the wholesale provider rates to better “connect the dots” of their claims program.

        1. Thanks for the note Rudy – I’m not sure how knowledge of the wholesale provider rate helps the payer. That is based on an assumption that there’s a negative correlation between discount and quality; that is, the bigger the discount the worse the quality.

          If you have studies or research on this I’d love to see it.

          Unless you can quantitatively connect those dots I very much doubt payers will care about wholesale prices – in most instances. As for Medicare prohibiting the practice, I’m not sure what “practice” CMS prohibits. Medicare has enabled many kinds of creative reimbursement mechanisms and methodologies; in Medicare Advantage plans there are definitely providers offering discounted services. Same in some medicaid plans. If you could clarify that would be helpful.

          be well – Joe

  5. I believe it was Peter Drucker who said “Most serious mistakes are not made as a result of wrong answers but rather as a result of asking the wrong questions.” Having the right answer is smart. Having the right question is genius.

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Joe Paduda is the principal of Health Strategy Associates



A national consulting firm specializing in managed care for workers’ compensation, group health and auto, and health care cost containment. We serve insurers, employers and health care providers.



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