Trading the Sledgehammer for a Scalpel - Dr. Mark Fendrick Discusses the Power of Value-Based Care Within the OB Setting

Trading the Sledgehammer for a Scalpel - Dr. Mark Fendrick Discusses the Power of Value-Based Care Within the OB Setting

Value-Based Care, Providers, Maternity

Dr. A. Mark Fendrick conceptualized and coined the term Value-Based Insurance Design (V-BID) and currently directs the V-BID Center at the University of Michigan, the leading advocate for development, implementation, and evaluation of innovative health benefit plans.  His research focuses on how clinician payment and consumer engagement initiatives impact access to care, quality of care, and health care costs.  Wildflower recently interviewed Dr. Fendrick on the impact value-based care can bring to the OB setting. 


How do we find the resources to effectively fund value-based care initiatives in the OB setting?

There is more than enough money in the system. The problem is we spend it on the wrong services, in the wrong places, on the wrong people and at the wrong times. One reason value-based care attracts multi-stakeholder and bipartisan support is that it’s goal is to produce more of the good stuff and less of the bad stuff. It’s easy to align around that concept. Everyone agrees we need to move away from fee-for-service to quality driven payments. We just have to solve for price, and who pays.

I’m a big fan of making it easy for both sides, patients and clinicians, to do the right thing. I believe in global payments for the OB episode.  The amount paid for the bundle, as well when the bundle would begin and end is up for debate, but I think it should extend beyond the birth of the child.  

If the physician only gets paid for patients who come into the office, if the physician is paid more for elective C-sections than for vaginal deliveries, we have a rub. I want to pay clinicians more for doing what they need to do and to no longer pay for things that aren’t valuable or necessary. We can use the savings from reducing unnecessary care, to better compensate the good things (i.e. evidence based care) we want to see more of moving forward. There is a formula here where total costs can be reduced, and we can pay providers more for high-quality care. 

What impact has the COVID-19 pandemic had on value-based care?

Many healthcare stakeholders - especially clinicians -have taken financial hits due to the COVID pandemic and are trying to get back on solid financial footing. Providers are hurting, which is why I continue to advocate that we should pay them more for clinically indicated care in the short term, while holding them accountable for reducing unnecessary services.

There is hopefully a reset coming out of COVID. That is the silver lining of the pandemic. We have an opportunity to allocate more services to support patient needs based on evidence and clinical preference and to pay more for activities that matter. We can finance more of the right care by shifting compensation away from things that we shouldn’t be paying for in the first place. The pandemic has forced more active discussions about what care is necessary and what is not. 


Can you talk more about how we should be determining what care is necessary? 

A key tenant of value based care is targeting. We are using a scalpel instead of a sledgehammer. 
We have over-medicalized the prenatal experience and underestimated the importance of social factors. It’s highly likely that we are too heavy-handed in serving the medical needs of expectant moms while not adequately addressing the non-clinical obstacles preventing better outcomes. In a global payment scenario, funds can flow to where the clinician and patient determine they should be focused. 

It’s important to understand that no specific service is inherently high or low value. It’s relative based on the patient, who provides the care and the venue in which it is delivered. I don’t think there are clinical guidelines that dictate all prenatal visits should be in-person or that lab tests and ultrasounds are necessary at every visit. I also don’t believe it’s a one size fits all equation, either. We can streamline care based on evidence, and we can personalize care based on patient preference as long as it falls within this base of evidence. Patients should receive the care they need in the venue that is best for them. Some encounters will require an in person visit, others can be done remotely. And some visits should be left for the patient and their clinician to decide.

Some clinical situations are actually better managed in the patient’s home. Blood pressure is a great example. High blood pressure is one of the most common reasons individuals visit a primary care physician. With today’s technology, your blood pressure can be taken accurately at home, and in many circumstances provide more useful information since most patients experience artificially elevated levels in the exam room when compared to the comfort of their own home. 


In addition to restructuring the way clinicians are compensated, you also believe we need to address how maternity costs are shared with consumers as well. Can you elaborate? 

The idea of patient cost sharing was intended to encourage consumerism and prevent people from seeking unnecessary care. In prenatal care, there is no overuse of the system when it comes to deliveries. The baby is coming, regardless of where and by whom the baby is delivered. Conceptually, it makes no sense for patients to be burdened by thousands of dollars of out of pockets costs to deliver a baby. According to the Federal Reserve, 40 percent of Americans don’t have $400 in the bank. Meanwhile, the average out of pocket costs for a delivery in 2019 was $3-4,000. The burden is an obvious one, and we if were to lower these costs, I believe maternal health outcomes would be improved. My belief is that every mother should have the option to deliver her baby in a high-quality venue and not incur a significant financial burden. Families should not have to have a bake sale to try and cover the costs of having a baby. 

Any final thoughts on value-based care within the OB setting?

We need more transparency. From the outset, it should be clear what the provider will be paid for, and what the patient will be responsible for, regardless of the outcome. This would allow clinicians to focus on the care they feel to be absolutely necessary and would ultimately lead to more customized care for patients that generates better outcomes and a more convenient experience. 

The OB episode is a great learning laboratory and teaching experience for other clinical scenarios moving forward. Value-based design can work well in this space and can serve as a proving ground for the impact that is possible when we align stakeholders to focus on quality. 

For more insights from this interview series, as well as additional tools and best practices to accelerate your journey in virtual and value-based care, please visit