JBJS Reviews
Measuring Value in Orthopaedic Surgery
Benedict U. Nwachukwu, MD, MBA; Kamran S. Hamid, MD, MPH; Kevin J. Bozic, MD, MBA
  • Value in orthopaedic surgery is defined as health outcomes per dollar spent. A patient-focused definition of value benefits all stakeholders in musculoskeletal care.

  • Value can be measured by understanding patient outcomes (including disease-specific patient-reported outcomes as well as generic health-related quality of life) and the cost of care across the whole continuum of musculoskeletal care.

  • Calculating costs can be challenging. Popular cost-accounting methods in orthopaedics include standard cost accounting and job order cost accounting. Time-driven activity-based costing holds great promise as a model to fully capture the cost of care.

  • Alternate methods of assessing the economic impact of orthopaedic interventions include cost-effectiveness analysis, cost-utility analysis, and cost-benefit analysis. Payers and policy makers are increasingly using these methodologies as a decision-making tool for policy and payment decisions.

Health-care expenditures currently account for 18% of the United States Gross Domestic Product (GDP)1. Some experts have suggested that an emphasis on value may be an effective strategy to bend the cost curve in health care2,3. However, the value framework is poorly understood4. Most other service industries have shared goals to unite the interest of stakeholders; in the case of health care, however, stakeholders are myriad and their goals are often conflicting5. Under this fragmented system, adopting a patient-oriented definition of value will benefit patients, payers, providers, and suppliers while ensuring the economic sustainability of the health-care system. Thus, in the current review, we have adopted the recommendation proposed by Michael Porter, a Harvard Business School professor and noted health-care policy expert, who defined value as health outcomes achieved per dollar spent6.

According to Porter’s definition, value is not a nebulous concept but rather is a measurable economic ratio of outcome to cost (the “value equation”). The numerator …