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Assessing Value of Specific Spine Conditions

Setting the Equation: Establishing Value in Spine Care

Resnick, Daniel K., MD, MS*; Tosteson, Anna N. A., ScD; Groman, Rachel F., MPH; Ghogawala, Zoher, MD§,¶

Author Information
doi: 10.1097/BRS.0000000000000581

Spine care is a focus of cost and quality efforts in the United States and throughout the world for several important reasons. First, spinal disorders and disability due to spinal disorders are very common. In the 2010 Global Burden of Disease Study, of the 291 conditions studied, low back pain was ranked highest in terms of years lost to disability, with 83 million disability-adjusted life years lost attributed to low back pain in 2010.1 Second, care of spinal disorders is very expensive. In the United States, 6% of adults see a physician for a back and neck complaint every year and the costs associated with these visits has doubled during the past decade, with physical therapy costs increasing most dramatically.2 Martin et al3 analyzed Medical Expenditure Panel Survey data from 22,258 respondents in 2005. Of these respondents, 3187 reported spine problems, and those respondents who reported spine problems indicated that their medical costs were nearly twice that of respondents who did not report back or neck complaints ($4695 vs. $2731).3 These costs continue to increase despite a lack of information to indicate that these increased costs are associated with improved outcomes.

Complicating the issue is the fact that there are multiple different treatment strategies for spinal disorders. A quick literature search using the terms “low back pain” and “disability” performed in April 2014 yielded articles describing the effectiveness and/or cost-effectiveness of deep tissue massage, acupuncture, whole-body vibration exercise, manipulation under anesthesia, percutaneous adhesiolysis, core stability exercise, lumbar mobility exercise, pars interarticularis injections, epidural steroid injections, therapeutic ultrasonography, microwave diathermy, cognitive therapy, balneotherapy, nucleoplasty, and the use of various surgically implanted nonfusion devices.4–16 These all appeared within the top 40 most recent references and do not even include the commonly used strategies for back pain such as chiropractic care, lumbar fusion, cognitive therapy, or medical management.

Clearly, there is a need to define the value of these different interventions in order to make judgments regarding the relative worth of these disparate treatments in different patient populations. The purpose of this article was to explore the definitions of value, propose several mechanisms for the assessment of value, describe the limitations of these definitions and mechanisms, and discuss some of the regulatory imperatives that are accelerating the pace of measurement despite acknowledged limitations in the ability of practitioners to define, let alone measure, value in spine care. A glossary of commonly used terms is provided to help the clinician with unfamiliar terms (see Supplemental Digital Content, available at


For individuals affected by spine problems, the choice between operative and nonoperative care is often viewed as a “preference-sensitive” decision—one that should hinge on how a patient feels about his or her current state of health relative to the risks and benefits of undergoing surgery. Informed decision making requires that patients fully understand the treatment alternatives and that they make choices that are aligned with their preferences for the benefits and harms of each possible treatment.

Preference for health may be formally measured using the concept of health utility where each health state is assigned a value or preference weight on a scale, where 1 represents “best imaginable health” and 0 represents “worst imaginable health or death.” It is noteworthy that any 2 individuals with objectively equivalent health-related quality of life based on a health status measure such as the 36-Item Short Form Health Survey may view their health quite differently and assign different utilities. There are a number of ways to elicit health utility ranging from direct utility assessment with a standard gamble, time tradeoff, or visual analogue scale to preference-weighted health state classification systems such as the EuroQol EQ-5D or Health Utilities Index.

Valuing spine treatments requires measuring how care affects patients' health-related quality of life. This is critically important because many spine conditions for which care is provided do not extend life. Instead, they improve patient's health-related quality of life—their ability to function without pain in carrying out their activities of daily living. To assess the value of interventions that impact quality, not only length of life, it is critically important to have an outcome measure that characterizes the quality-of-life dimension.

Quality-Adjusted Life Year

The quality-adjusted life year (QALY) is the most widely used effectiveness measure that combines length and quality of life into a single number.17 QALYs were developed as a measure for use in economic evaluation in health and medicine more than 30 years ago.18,19

QALYs are typically estimated by multiplying the amount of time spent in each health state by each state's health utility and summing up. For example, if one were to spend the next 10 years with 5 years in perfect health, 3 years with limited mobility, and 2 years with limited mobility and moderate pain and these health states had respective utilities of 1.0, 0.85, and 0.7, this would be equivalent to 8.95 QALYs (5 × 1 + 3 × 0.85 + 2 × 0.7 = 8.95).

Societal Values and Cost-effectiveness Analysis

The Panel on Cost-effectiveness in Health and Medicine recommends that QALYs be used to measure the effectiveness in economic evaluations of health care interventions.20 Measuring effectiveness in terms of cost per QALY gained has the advantage of allowing comparisons of the value of health care interventions across a wide array of health domains. For example, the effectiveness and value of interventions for spinal disorders may be compared directly with cardiovascular disease interventions. The literature on the cost-effectiveness of diverse health care interventions is catalogued in the Tufts School of Medicine Cost-effectiveness Analysis Registry (

To evaluate the cost-effectiveness of competing health care interventions, an incremental cost-effectiveness analysis is required, with the incremental cost-effectiveness ratio (ICER) serving as the cost-effectiveness measure. The ICER is defined as the change in cost divided by the change in effectiveness for each of the more costly alternatives when they are ranked from lowest to highest cost [ICER = (C2− C1)/(QALY2QALY1)]. When the costs of alternative care strategies are plotted against their estimated effectiveness (Figure 1), the slope of the line between strategies is the ICER.

Figure 1
Figure 1:
Graphical representation of ICER for strategy 2 relative to strategy 1 when strategy costs are plotted against the QALYs associated with each strategy. ICER indicates incremental cost-effectiveness ratio; QALY, quality-adjusted life year.

Although it is widely accepted that the individual patient's preferences and health utilities should guide his or her decision making, when assessing the cost-effectiveness of health care interventions, it is societal preferences for health outcomes rather than the preferences of those directly affected that are considered appropriate. Preference classification systems, such as EQ-5D and Health Utilities Index, measure health status in individuals with the health condition of interest but assign a societal health state value to each health state defined within the system on the basis of a scoring algorithm.20 This approach for valuing spine surgery was used in the Spine Patient Outcomes Research Trial (SPORT), which has assessed the cost-effectiveness of spine surgery relative to nonoperative care for patients with intervertebral disc herniation, spinal stenosis, and degenerative spondylolisthesis.21–23


The importance of value when assessing spine treatments is becoming more significant not only because of a need to control health care expenditures in general but also because many recognize that higher quality might be associated with a lower cost. Indeed, comparative effectiveness research cannot really be separated from cost-effectiveness research when it comes to spinal disorders. It is generally agreed that an economic analysis must compare costs per QALY gained for one treatment versus an alternative. Although each society must ultimately decide on what it is willing to pay for an additional QALY for one individual, in the United States, a commonly used cost-effectiveness benchmark is $100,000 per QALY gained.24

The complexity comes from the calculation of cost and from what perspective. Health care charges are often used as a surrogate for health care costs because charges can readily be obtained from administrative databases. Charges from inpatient administrative databases such as the national inpatient sample are inflated and do not represent actual costs or even reimbursement. Applying cost-to-charge ratios25 or calculating reimbursement using Medicare's values26 is commonly used techniques for estimating actual costs. Costs must be calculated not just for an episode of hospital care but also during a reasonable time horizon from a societal perspective and must include direct inpatient and outpatient health costs (hospital, pharmacy, professional, radiology, laboratory testing, etc.) and indirect health costs (e.g., lost productivity and missed work for the patient and his or her caregivers). These types of economic assessments generally require the expertise of health care economists.

The SPORT included an economic analysis that permitted the assessment of cost-effectiveness for surgical therapy versus nonoperative therapy for lumbar disc disease, lumbar spinal stenosis, and lumbar spondylolisthesis. Two major concepts emerged from this analysis. Cost-effectiveness for lumbar discectomy versus nonoperative treatment at 2 years was $ 69,403 per QALY gained (all payers), but a significantly different figure was generated ($34,355/QALY gained) when Medicare-specific reimbursement costs were used.27 The critical importance of time horizon was also observed. For example, surgery versus nonoperative treatment of lumbar spondylolisthesis was above the $100,000 per QALY threshold at 2 years ($115,600/QALY)28 but fell below the commonly accepted willingness-to-pay threshold at 4 years ($64,300/QALY).29 Clearly, the choice of methodology affects the results of an economic analysis. Studies comparing more costly upfront treatments (e.g., surgery) can be compared with less costly upfront treatments for an appropriate time horizon that permits the durability of treatments to be compared.

The importance of time horizon is illustrated well in a study by Soegaard et al30 that compared circumferential lumbar fusion versus posterolateral lumbar fusion. The study found an incremental savings of $49,306 per QALY for patients treated with circumferential fusion versus posterolateral fusion during an 8-year time horizon. The circumferential fusion cohort had a higher fusion rate and had a 15% reoperation rate versus a 38% reoperation rate observed in the posterolateral cohort. Circumferential fusion was associated with superior functional outcomes, but the long follow-up period demonstrated the overall cost-effectiveness because the circumferential fusion seemed to be more durable than the posterolateral-only fusion cohort.

The increased utilization of recombinant human bone morphogenetic proteins (rhBMPs) as a fusion enhancer has attracted widespread attention for its potential risks and costs. Administrative data using hospital charge data find that spinal fusion with rhBMP is associated with an average hospital charge of $74,254 compared with $57,393 for spinal fusions without rhBMP.31 These data do not contain comparable populations, nor do they include outcomes or QALY data. Many studies have compared the cost of iliac crest bone graft with rhBMP for lumbar fusion and have found similar actual hospital costs32,33; however, without comparing differences in overall outcome and including outpatient and societal costs, the cost-effectiveness of rhBMP is largely not known.

As more new implants and devices enter the spine market, it will be imperative that comparative outcomes research incorporate comprehensive cost evaluations. Calculating health costs from a societal perspective and comparing costs over time will enable investigators, payers, and policy makers to make rational decisions about the comparative cost-effectiveness of various options in spinal treatments going forward.


In the decade leading up to the signing of the Affordable Care Act (ACA), there was a growing sense of urgency within the public and private sectors to create a more sustainable health care system. Some of this pressure came from documented shortfalls in US health outcomes, which lagged sorely behind other developed nations. Other pressure came from groundbreaking estimates of medical error ubiquity and patient harm.34,35 Although these lapses in quality made headlines and caught the nation's attention, the larger impetus for health reform was the growing disconnect between spending and quality. For more than a decade leading up to the ACA, health care spending had been growing at a rate greater than the nation's overall economy,36 and by 2009, it was estimated that about 30% of health care spending was wasteful.37

Responding to what was less of an opportunity and more of a mandate for change, the ACA, and other legislation leading up to it, presented concrete plans to leverage federal buying power and reduce expenditures through the pursuit of high-value care. In fact, the term “value” is used more than 200 times throughout the text of the ACA38 to characterize a range of provisions aimed at reducing waste on multiple fronts. Targets include spending on items and services that lack evidence of producing better outcomes; costs that result from avoidable medical injuries, such as preventable infections in hospitals; fraud and abuse; and overall inefficiencies in the provision of health care goods and services.

These new initiatives take aim at foundational features of the Medicare payment system that, to date, have discouraged efficiencies and posed as impediments to higher value care. A commonly critiqued feature is the fee-for-service approach to physician payment, which incentivizes volume over quality. Although fee-for-service still remains, programs such as the Physician Quality Reporting System and the more recent Physician Value-Based Payment Modifier represent a shifting paradigm under which physicians are increasingly scrutinized and held accountable for both the quality and cost of their care. Together, these programs could result in cuts to physician payments approaching −10% in future years. The severity of these cuts is compounded by the fact that these programs rely on arbitrary performance thresholds, rudimentary risk adjustments and attribution methodologies, and measures that are only tenuously relevant and meaningful to the spine surgeon.

Medicare's inpatient hospital prospective payment system is another significant focus of value-based payment reforms. Although intended to promote efficiency by paying for predetermined diagnosis-based bundles of services, it does little to discourage unnecessary admissions and readmissions. As such, hospitals now receive payment penalties based on what the Centers for Medicare & Medicaid Services deems as excess or unnecessary readmissions, as well as certain inappropriate hospital-acquired conditions such as surgical site infections after certain orthopedic procedures. These penalties come on top of other value-based adjustments tied to hospital performance on a wide range of process-of-care, outcome, and patient experience metrics.

A broader effort to achieve higher value care aims to deconstruct the silos that exist between different care settings, resulting in fragmentation and duplication of services. This is particularly problematic at a time when individuals with 5 or more chronic conditions represent 22% of all Medicare beneficiaries but 69% of all Medicare spending ( The ACA-authorized Center for Medicare & Medicaid Innovation continues to test and implement a growing portfolio of payment and service delivery models aimed at breaking down those silos and encouraging better care coordination. These include shared savings models for accountable care organizations that better manage care across multiple settings, bundled payments within and across care settings for predefined episodes of care, and initiatives that take additional steps to reduce preventable hospital conditions and readmissions through the promotion of team-based approaches to care and smoother care transitions across settings.

The pursuit of high-value care also resulted in an unprecedented investment in comparative effectiveness research. The ACA-authorized Patient-Centered Outcomes Research Institute aims to ensure that both physicians and patients have more meaningful and useful information regarding the comparative clinical effectiveness of different procedures and services and that these studies are conducted in a methodologically sound manner. This independent organization funded partially by the federal government and partially by private insurers is required to conduct research in an open and transparent manner, disseminate its findings rapidly, and ensure that the needs of individuals and special populations are taken into consideration. Although the Patient-Centered Outcomes Research Institute cannot, under statute, make recommendations to mandate or deny coverage based on cost-effectiveness findings, the Centers for Medicare & Medicaid Services is still free to take evidence from comparative effectiveness studies into consideration when making coverage and reimbursement decisions.

Although much of the focus is on the entire value equation, other initiatives do not pretend to be about anything other than cost control. For example, beginning in 2015, if Medicare cost growth exceeds a certain rate, the ACA-authorized Independent Payment Advisory Board must make recommendations on how to reduce Medicare spending, and its proposals must be fast-tracked through Congress. Although concerns have been raised about the Independent Payment Advisory Board's unrestricted power and its potential to arbitrarily limit patient access to necessary care, the President has yet to appoint members because of slower than expected spending growth.

The federal government's unprecedented investment in achieving a high-performance health system will likely have a lasting effect on the way medical care is delivered, evaluated, and paid for in our nation. Nevertheless, the sustainable impact of these reforms will depend heavily on achieving a balance between the needs of the patient, preserving the autonomy of the health care provider, and promoting responsible stewardship of health care dollars.

Limitations of Value Calculations in the Spine Population

The discussion thus far has focused on the economic and legislative imperatives for the measurement of value in spine care. Definitions of value (such as cost/QALY) and potential mechanisms to measure value (such as prospective registries including health utility and cost information) have been described, and the rationale for these mechanisms has been explained. Although these concepts are valid, there are important practical considerations to take into account when measuring value that can dramatically change the conclusions reached when making value judgments. Important considerations are the perspective from which the value equation is being considered, the time frame of the value equation, the role of risk stratification, and the utility of value judgments in making payment and policy decisions.

As alluded to the previous text, value may be measured from the perspective of the payer, the individual, or the society. Differences in measured value may exist dependent solely upon differences in the perspective from which the value is measured. A simplistic example is illustrated by Angevine et al39 in a discussion regarding the cost-effectiveness of anterior cervical discectomy and fusion (ACDF) with and without plate fixation. The authors assumed (based on a literature review) that there were no significant long-term differences in outcome between the ACDF and ACDF plus plate (ACDFP) groups. Although both procedures were found to be cost-effective (using hospital operative and perioperative costs) in terms of cost per QALY, the ACDFP procedure was associated with a higher cost (the plate and its application cost ∼$1500 at their center). From a payer perspective then, it would seem that ACDF without plate would be the procedure with higher value—same outcome at a lower price. From a patient or societal perspective, however, the story is not so clean-cut. On the basis of their institutional data and a literature review, the authors report that patients treated with ACDFP go back to work on average 3 weeks sooner than those treated with ACDF alone. It is assumed that this difference is due to the surgeon's practice of requiring patients without plate fixation to wear a cervical collar for a period of time after the operation, prohibiting driving and work in most cases. If the lost income in those 3 weeks is more than $1500, then from a patient perspective, the ACDFP is the procedure with more “value.” Similarly, if the patient is able to produce more than $1500 in goods and or services during those 3 weeks, then society will benefit greater and find greater value with the ACDFP option.39 Similar discussions now focus on minimally incisional spine surgery—particularly transforaminal interbody fusion techniques that generally require more operating room time but are associated with faster recovery than traditional open techniques.40 When making judgments regarding the value of an intervention, it is extremely important to use the appropriate perspective. How the question is framed has a direct influence on the answer obtained.

A second important consideration is the time frame used for the determination of “value.” An expensive technique that is effective and durable will not seem to have value compared with a cheaper but less durable alternative unless the treatment effect is measured during an appropriate period of time. For example, Soegaard et al30 conducted a randomized controlled trial comparing posterolateral fusion with circumferential fusion for axial back pain due to spondylolisthesis or degenerative disease. Both groups enjoyed substantial improvement in pain and functional outcome compared with their baseline measures. At 2 years, there were no significant differences between the groups in either physical (Figure 2A) or psychosocial (Figure 2B) outcomes. Had the authors stopped their analysis at this point, they would have concluded that posterolateral fusion was the more cost-effective option for this patient population (similar beneficial effect for less upfront costs). The authors continued to follow these patients for a period of up to 9 years. What they observed was a more durable improvement in the circumferential group that led to less health care costs and less societal costs—the exact opposite of what they would have concluded if they had stopped the project at 2 years. A major difference is illustrated in Figure 2, taken from the Soegaard et al article, demonstrating a significantly larger proportion of patients working in the circumferential group than in the posterolateral group (Figure 3). Therefore, it is important to determine the appropriate time frame for the study of competing techniques for similar disease states. In a nonlethal condition such as low back pain, longer-term studies may make sense. A caveat to this general principle relates to opportunity cost of treatment. A therapy that results in a rapid improvement in health status (microdiscectomy, for example) may have intrinsic value even if long-term outcomes are similar to treatment alternatives that result in more gradual improvement. Getting a patient back to work in 6 weeks versus 6 months is certainly worth a substantial upfront investment.

Figure 2
Figure 2:
Physical and mental health scores following posterolateral and circumferential fusion. DPQ indicates dallas pain questionnaire; FU, follow-up; N.S., not significant. From Soegaard et al.30
Figure 3
Figure 3:
Return to work rates for posterolateral and circumferential fusion groups. Preop indicates preoperative. From Soegaard et al.30

The next issue to consider is the issue of risk stratification. Abdu et al41 performed a review of the surgical arm of the SPORT study looking at the results of different surgical strategies for stenosis associated with spondylolisthesis. When these authors compared the results of different surgical strategies—noninstrumented fusion, instrumented posterolateral fusion, and interbody fusion techniques, they found no significant differences in outcome. An uninformed review of these data might lead a patient, payer, or policy maker to conclude that the least expensive option (noninstrumented fusion) provides the most value (same outcome for less cost). Such an interpretation is flawed, however, because no information is provided regarding the rationale for the selection of a given surgical procedure for a given patient. Patients with stenosis and spondylolisthesis are not homogeneous—they differ in age, lifestyle, medical comorbidities, and anatomy. A 40-year-old truck driver with a mobile slip, tall disc space, and a history of smoking is unlikely to do well with an uninstrumented fusion,42 whereas a 78-year-old sedentary widow with a collapsed disc space may do quite well with such an approach. The best interpretation of the Abdu et al information is that when experienced surgeons present options to properly informed patients, the patient/surgeon team is able to choose appropriate procedures that are likely to work.

One of the most significant contributors to cost of a surgical procedure is a readmission or reoperation for a medical or surgical complication. A treatment strategy with a lower morbidity is generally going to be more cost-effective than one with high morbidity if the efficacy of the 2 strategies is similar. Retrospective analysis of administrative databases is not helpful for making these types of judgments because patient characteristics and patient-reported outcomes are not available. If more severely symptomatic patients tend to be offered more aggressive interventions, then comparing complication rates or costs between the groups is meaningless. One way to begin to address this issue is through the use of risk stratification.

Lee et al43 have developed a calculator ( that can predict the risk of medical complications after spine surgery based on information available preoperatively. Using a prospective registry, they identified risk factors for medical complications based on demographic, medical history, and approach-specific variables.43 Using such a calculator, it is possible to predict complications and costs for specific patient populations. This information, combined with patient-reported outcomes, allows for the rational evaluation of true value.


Value” is a popular buzzword in both medicine and spine care. Defining value is not an entirely straightforward exercise, however; and it is critical that the interpretation of value be done in context. The context must include multiple perspectives when it comes to cost and economic benefit, must include opportunity costs associated with the lack of treatment, and must include appropriate follow-up and risk stratification. Not every spine surgeon needs to be an economist or health policy analyst; however, all spine surgeons can contribute to the definition of value in spine care through participation in prospective registries that incorporate adequate preoperative risk assessment, accurate and complete complication reporting, and patient-reported outcomes measures. Embracing what works and is valuable and discarding what is not effective or valuable is an easy concept to understand and an impossible one to argue with. It is our responsibility to establish the evidence base and to help payers and policy makers with rational interpretation of the evidence base.

Key Points

  • Spinal disorders are a common, important, and expensive cause of pain and disability worldwide.
  • A multitude of treatment options exist for the management of spinal disorders. The effectiveness, cost-effectiveness, and value of many of these treatment options are not well defined.
  • Because of economic and legislative imperatives, future resource allocation will be toward treatments judged to have value.
  • It is possible to measure value in spine care using methods described in this article.
  • Limitations to the utility of value judgments that must be considered when choosing treatment strategies are discussed in this article.

Supplemental digital content is available for this article. Direct URL citation appears in the printed text and is provided in the HTML and PDF versions of this article on the journal's Web site (


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value; QALY; disability; functional outcome; lumbar fusion

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