Warranties in health care

Many products come with warranties from cars to cell phones to refrigerators. Except for the “global surgical period” health care offers no such guarantees.

“The Mechanic” (Flickr / Creative Commons)

Warranties are a common feature of many goods and services purchased in the American economy. There are two key features of warranties for most products: (1) insurance against unsatisfactory performance and (2) provision by the manufacturer and not a third-party insurer. The purpose of warranties in the marketplace is to demonstrate quality to a consumer for a product whose quality is unable to be evaluated until after purpose.

As the authors of this study report, the key to making warranties work is determining which product failures are the fault of the manufacturer and which are outside the manufacturer’s control. In surgery, there is a concept known as the “global surgical period” which ranges from 10 days for minor surgeries to 90 days for major surgeries. The global surgical period covers pre-operative, operative, and any necessary post-operative care (as long as another surgical procedure is not necessary). The global surgical period serves as an all-inclusive package for surgical procedures. However, the global surgical period does not warranty against “product failures” such as needing a second knee replacement because the first one got infected. In medicine, it is far more difficult to determine which “product failures” are the responsibility of the physician and which may be due to patient conditions such as co-morbidities, non-compliance, or simple bad luck.

To combat these difficulties, researchers developed a conceptual framework termed “evidence-informed case rates” to function as warranties in healthcare. This required the separation of risk into “probability risk” and “technical risk.” Unfortunately, these two types of risk were only distinguishable theoretically.

To determine evidence-informed case rates, costs for cases were averaged subtracting out the costs for potentially avoidable conditions. As some level of complications are ultimately unavoidable, an allowance was made for a fraction of these potentially avoidable conditions. Clinicians able to provide a service with fewer complication demonstrated increased profit margin with this style of compensation.

The overall purpose of warranties in medicine would be to add accountability in and transform a fee-for-service payment system into an episode-based payment system. Such a change would require a slight modification from today’s current global surgical periods which exclude additional procedures. Under a warranty system, additional procedures would be free to the consumer and therefore costly for the physician. While such a transition could result in improved quality in health care, it will be difficult to define and therefore achieve buy-in from providers.

Commentary

I was at dinner this week with an ear, nose, and throat surgeon who told me he did a tonsillectomy earlier in the week. He described how – because of the global surgical period – he was “on call for anything that goes wrong with that tonsil for the next 90 days.” This of course covers any intervention outside of a return to the operating room. In order to transition surgical care to a complete warranty, clinicians would have to be on the hook for any additional surgeries required as a complication of the first.  Such warranties appear to function better for procedural care; warranties are less likely to be successful in outpatient settings.

Another major focus of attention for policy makers is hospital readmissions. While providing a hospitalization-free warranty period may be appealing, patients may require hospitalization for reasons completely separate from the initial admission. Also, patient noncompliance can play a serious role in hospital re-admissions.

For chronic conditions, is it feasible to guarantee that  diabetes or high blood pressure be controlled after a set number of office visits? Outpatient care is not well suited to warranties. Nevertheless, policy makers should continue the discussion of quality initiatives such as warranties and P4P. They should remain mindful, however, that medicine is a uniquely individual experience unlike the purchase of am appliance or a luxury automobile. Warranties for medicine and surgery may be possible, but require much more thought.
Health Affairs. 2009; 28 (4): w678-687.

by
Cedric K. Dark, MD, MPH