Guest Post: Why American Medicine Needs A Moneyball Moment

By John Miner and Brad Stulberg
Students in the Masters in Health Services Administration program at the University of Michigan

John Miner

Brad Stulberg

With baseball season over and “Moneyball” exiting the box-office, we cannot help but wonder: When will American medicine have its Moneyball moment? The story of the Oakland A’s and their “do more with less” approach to baseball can serve as a model for American health care: Health care should start measuring and paying for value instead of simply paying for quantity.

Moneyball tells the fascinating story of how the Oakland A’s management team drastically departed from conventional wisdom in building a top baseball team. Rather than continue in the ways of an inefficient baseball marketplace — where value was neither appropriately measured nor paid for — the A’s developed a system that prioritized data-driven insights along with human judgment to construct their lineup.

While teams like the New York Yankees paid tens of millions for star players that “looked great” or had “beautiful swings,” the Oakland A’s fashioned a method to figure out what player attributes really drove outcomes (in this case, winning baseball games) and then paid players based on those attributes: value-based purchasing, if you will.

When compared to other developed countries, America is like the Yankees in terms of payroll — only without the 27 championships.

The A’s philosophy was in stark contrast to prevailing baseball culture. The franchise’s unconventional success rested upon a restricted budget (A’s ownership capped management spending at a hard amount), transformational leadership, and a change in mindsets and behaviors across the A’s clubhouse. The end result? Oakland, with a payroll two to three times smaller than top contenders, was able to compete with traditional powerhouses.

The analogy to health care is striking. Too often, health care dollars are disconnected from value; decisions are made based on precedent, anecdote, and preference rather than evidence; and new statistics and evidence-based measures are confronted with overwhelming disdain. (In fact, Billy Beane of the A’s has himself written about this parallel, in an op-ed piece with Newt Gingrich and John Kerry.)

Value is rarely measured appropriately and even more rarely paid for in health care. Despite having the highest per-capita expenditures in the world by a sizeable margin, the United States ranks in the middle of the pack across most quality metrics. When compared to other developed countries, America is like the Yankees in terms of payroll — only without the 27 championships. Many books and entire careers have focused on this, and have converged around overarching themes. Costs must be understood and measured more accurately and quality must be assessed more robustly and made transparent. Only then can payments more directly reflect value.

Positive trends in this direction include activity-based cost accounting (within data-driven hospitals), bundled payments and other capitation methods, public quality measures, and CMS’ support of value-based purchasing. The emerging momentum behind these and similar concepts could act as a foundation for reforming United States health care in a way that ensures the flow of dollars rewards endeavors that lead to better health.

This change in paradigm will not be easy. America’s health care environment caters too often to physician preferences and patient perceptions instead of evidence-based practices. The healthcare community could benefit from watching a poignant scene in Moneyball, in which Billy Beane, the A’s visionary general manager, talks with old-school scouts about whom the team should recruit given its loss of big-name players. Billy flips conventional wisdom on its head, suggesting that players that “don’t look like great baseball players” are often under-appreciated. The scouts cannot accept this, and an argument ensues. While the scouts eventually come around after viewing compelling data, they remain bitter and doubtful.

Much like the tenured scouts, clinical practice frequently relies too much on outdated and narrow training and not on current evidence. This readily manifests itself in data showing enormous variations in care based on geography.

For the most complex conditions where treatment approaches are highly uncertain, this sort of variation is plausible, and to a large extent, necessary and positive as a driver of innovation. That said, the amount of variation surrounding more common conditions and routine processes of care is much less appealing. The fact that knee-replacements are done differently all over the country, or that some operating-rooms implement a “time-out” or “team huddle” process and others do not, is a bit bewildering, since for these things, there is generally an approach that is proven to work best.

A notable antidote to this problem is Atul Gawande’s call for medicine to utilize checklists like the airline industry (“The Checklist Manifesto”) which serves as an example of medicine moving towards evidence-based care. Additionally, clinical decision support systems built into a health system’s IT can, if done well, help bring a wealth of continuously changing evidence to the point-of-care.

 

‘The Oakland A’s proved that against the backdrop of a market where dollars were not chasing value, a limited payroll could go a long way.’

 

At a more macro level, comparative effectiveness research has the potential to serve as the foundation that moves health care from a world of implicit rationing to a world where limited resources are spent in the best way possible. Just as Billy Beane was able to make better managerial decisions when he had more and enhanced data on players, the medical community can improve by using comparative effectiveness research to encourage, prescribe, and perform those things that will best improve patients’ health.

By no means are clinicians the only ones at fault. In what has become known as a “Medical Arms Race,” hospitals around the country are quick to invest in and propagate the latest and greatest technology, often without proof that these expensive solutions are any better at improving health outcomes than their predecessors. In baseball, this is no different than teams chasing after heavy home-run hitters, even though the big-bats may not help achieve the end goal of wins.

The current approach is ineffective and inefficient at best and harmful to patients at worst.

Fighting conventional wisdom is like swimming upstream. It will take strong Billy Beane-like leaders and a change in the mindsets of clinicians and hospital administrators alike to implement a value-driven, evidence-based approach to medicine. While this approach has critics, the fact that America needs to do more with less, given our current health care, fiscal, and economic landscape, is indisputable. Like it or not, American healthcare may soon be given its “capped budget.”

The Oakland A’s proved that against the backdrop of a market where dollars were not chasing value, a limited payroll could go a long way. United States health care could benefit greatly from moving forward with a similar approach.

The authors are reachable at Johndminer@gmail.com and bradstul@gmail.com.  

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  • Anonymous

    Very discouraging to see students in health administration so enthusiastically hawking the supposed application of Billy Beane’s “magic” to the field of healthcare. Let’s leave aside the inconvenient fact that Beane’s premise was so terribly wrong (the A’s never progressed past division series; the Boston Red Sox, taking the opposite approach, have now won 2 World Series in the past 7 years). But even if it had worked in baseball, the analogy to American healthcare would remain fraught. Why are we not getting adequate healthcare for the money we spend – and why do costs continue to skyrocket? There’s a simple answer, but it quickly gets obscured by the sort of hyperbole over “clinical decision support” and “comparative effectiveness research” exemplified in this article. That simple answer is waste + fraud — but mainly (and uncontroversially), waste. Our he current system of multiple (mostly private, for-profit) insurers loses us more than $400 billion annually. Take the profit of of healthcare and replace all private insurance with an improved and expanded Universal Medicare. That would give us the capacity — finally — to provide care to everyone. That is the just way forward. Then we can argue about baseball.

    • http://greaterthanendurance.blogspot.com/ ForEBM

      Jim, you got it wrong here on all fronts:

      1) Theo Epstein (Boston Red Sox GM) actually mirrored the Billy Beane model is responsible for those 2 championships in the past 7 years

      2) Insurance company profits can be large, but so can the fraud and abuse costs of the public (e.g., Medicare) programs, so having a profit incentive isn’t all bad.  Also, profits might have something to do with why all the latest innovation in disease management programs have come from private payors

      And finally, even with a Universal Medicare, it’s hard to argue against using data to make more informed treatment decisions.  Medicare for all won’t solve the problems of over-treatment, under-treatment, and mis-treatment. 

      I think it’s very encouraging to see health administration students thinking in this direction, and discouraging to see that only in healthcare do onlookers think that using data and enhanced information won’t be useful. 

      • Anonymous

        Thanks for this thoughtful (but erroneous) reply:
        1) Theo Epstein’s “mirror” involved the expenditure of approximately 30 times greater outlays in player salaries. If that’s the sort of inspiration driving the next generation of health care experts in this country, then good luck to us.
        2) Respectfully, I challenge you to provide one single shred of objective evidence that private-payor subsidized “disease management”has resulted in improved health care for anyone.
        3) Nothing in my original post can or should be construed as arguing against the use of data. Evidence-based medicine is what I do for a living. I’m not sure which onlookers in healthcare you’re referring to. But I’d suggest that those who persist in hawking the supposed benefits of a profit-driven system are most egregiously guilty of faith-based (as opposed to evidence-based) behavior.
        Jim

  • civis isus

    Re: the timeline for the MoneyBall moment in health care: Bill James was among the first to clarify the significance of many sabermetric concepts for baseball fans, and obviously wasn’t first to conceive of many of them. He began writing in the late 1970s, over 15 years before Sandy Alderson, then Beane, began implementing these concepts with the As. 

    James wrote out of passion. Alderson & Beane implemented largely out of desperation. And as others here have noted, much of what they have thought, written, and implemented years and years ago has not been absorbed or integrated in contemporary baseball management. 

    That’s the way disruptive innovation works, basically, and how it will play out in US health care – glacially. Retrospective identification of inflection points is, well, just that. In other words it’s not inaccurate to retort that there WAS no “Moneyball moment”.

    Look to Africa, look to India, look to Singapore, look to places where health care is different now, because there are few alternatives.

  • http://greaterthanendurance.blogspot.com/ Brad Stulberg

    It’s pretty incredible that three years after Mr. Beane’s editorial, and probably a decade or more since Michael Porter’s initial thinking on this topic, so much has stayed the same.  While this sort of path-dependency and slowness to change is definitely common in healthcare, hopefully health reform can serve as an inflection point for leaders in the field to take risks and actually implement some of these and similar ideas that – like John (the other author) said – unbeknownst to us, were actually written about years ago.  

  • Reasonable?

    This also very similar to the writing on the concept of Value Based Health Care (VBHC) by Michael Porter at Harvard Business School.  But I like the populist v. “wonky” ‘spin’ here.  Moneyball draws more eyes than, “VBHC”.  Keep up the good work!

  • Guest

    Very similar op-ed from 2008, from Mr. Beane himself and 2 others:  http://www.nytimes.com/2008/10/24/opinion/24beane.html

    • http://commonhealth.wbur.org/about/carey-goldberg/ Carey Goldberg

      Thank you! Have just inserted a link to it.

    • John Miner

      Thanks for passing this op-ed along. Brad and I (the authors) actually had not seen this article before. The recent movie is what triggered the analogy for both of us. We think the analogy still applies more than ever and that a lot of developments since 2008 (health reform, federal and state budget pressures, The Great Recession, etc.) make for additional context and evidence.

    • http://www.terranovatv.net Terra Nova

      Thanks for that link