Christopher S. Girod
Milliman & Robertson Inc.
David V. Axene
Milliman & Robertson Inc.
MANAGED CARE August 2000. ©2000 MediMedia USA

Christopher S. Girod

Milliman & Robertson Inc.

David V. Axene

Milliman & Robertson Inc.

The last half of the 20th century presented a dramatic increase in new health care technologies and improved health care practices. The results have been largely predictable: People live longer and enjoy healthier lives, but they experience skyrocketing health care expenditures. The relationship between benefits and costs seems clear. You get what you pay for. Or do you?

As new technologies or interventions are developed and introduced, governments, providers, and payers determine whether the new technology or intervention should be permitted, used, or paid for, respectively. They are often trying to determine whether it is appropriate or whether it has value. The expected advantages and disadvantages of the new technology or practice are evaluated in terms of a variety of measures, including patient outcomes and costs. In the case of new technologies, this process often is performed prospectively, without the availability or use of evidence-based outcomes studies. Expected outcomes and costs must be projected. The assessment process involves answering questions such as:

  • What are the advantages for patients?
  • What are the expected costs for third-party payers?
  • How will providers' revenues be affected?
  • How are employment-related costs affected (e.g., disability income benefits, lost productivity)?
  • Does the new technology represent an expected increase or decrease in long-term health care costs for the community as a whole?
  • If there are additional costs involved, are they outweighed by the potential benefits?
  • How can the perspectives of all parties be adequately represented in a single measure of value?

This paper discusses the process of value assessment, and presents a proposed value assessment methodology that can be used to evaluate any health care technology, procedure, drug, or medical management process.

Author addresses

Chris Girod, ASA, MAAA
Health Care Management Consultant
Milliman & Robertson Inc.
9255 Towne Centre Drive, Suite 900
San Diego, CA 92121
888-558-4010, ext 201
858-597-0111 (fax)

David V. Axene, FSA, MAAA
Principal & Health Care Management Consultant
Milliman & Robertson Inc.
9255 Towne Centre Drive, Suite 900
San Diego, CA 92121
888-558-1236 (direct line)
877-793-1636 (direct fax)

This paper has been peer reviewed by appropriate members of Managed Care's Editorial Advisory Board.

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