When measuring costs in health care, value patient time the highest

While studying time-driven activity based costing here at @HBSExecEd, I was asked by a colleague to put down my thoughts regarding a comment I made in the discussion.

It goes like this.

Way back when, I learned cost-utility and cost-effectiveness analysis. I created decision trees, assigned probabilities, and assigned dollar values to activities in health care. When it came to valuing the cost of a patient leaving their home/work/school to get a service, I needed to assign a dollar value to that, too, and so I asked my professor what I should do. He told me there wasn’t an answer for that kind of question, so just value the patient’s time the same as a doctor’s time. That’s what I did and I never looked back.

In fact, I now say that I value a patient’s (or member’s, as we call them) time at the highest dollar value of the most expensive physician. Why?

• For us at Kaiser Permanente, the currency is time, not money. We aren’t paid more money to do more things to people, we are paid to do the right things for people.
• In my formative years working with patients, they would say, “why is it okay for me to wait 30 minutes in a waiting room for you, and you not to wait for me, isn’t MY time valuable?” And they were right.
• Member time is the most precious asset we have, and I am not just talking about time to get health care. I am talking about time to walk to work to provide for your family, time to achieve your life goals. Time to live. Poor health takes away from all of these things. Good health gives you time. What is health care here for except to give the people we serve, time.
• When we waste member time, either through delays in care, or by not supporting their health – by doing too many things or doing too few things – we never get it back. Physician time, on the other hand, can be purchased. This doesn’t mean physician time should be wasted either, this is about valuing time equally.

In the article we studied as part of this discussion, it says “Estimate the cost of supplying patient care resources.” Nowhere does it say, “estimate the cost to the patient” – the most valuable resource there is in health care.

Alignment through equal value

If we think in terms of member time instead of our time, things are much better aligned. Does a member want to give up time to pay for a new hospital (which they would because they would work more hours to pay higher premiums)? Sometimes they would, and the commitment of their time is the most powerful one.

Does a member want to lose time with their family because of a missed diagnosis, an extra unneeded referral, or a medication’s side effects? Answer to that is easy.

I always ask every question in health care in terms of the cost to the member, and that cost is ultimately their time, which is as valuable as mine is, if not more 🙂 .

I hope this helps explain things. As usual, comments are welcome and encouraged.