The Death of the "What Is Value" Guessing Game for Clinical and Plan Decision-Makers Ready to Move On, With Ahilan Sivaganesan, MD

Most hospitals cannot tell you the true internal cost of a single care episode. Not the medical device costs, not the personnel, not the consumables — the actual cost. And yet we operate a $5.6 trillion sector asking clinical organizations to take on risk for outcomes and costs they cannot quantify. As Dr. Siva puts it, you can never expect a physician to go at risk if they don't understand their own costs. Jumping in without that data is jumping blind into an abyss.

In this episode, Stacey Richter speaks with Dr. Ahilan Sivaganesan, MD (Dr. Siva), a practicing neurosurgeon, researcher, and national leader in value-based care whose work focuses on the costs and outcomes of spine surgery, about a framework he calls the Operative Value Index (OVI) — and why it may represent the infrastructure shift that value-based care has always required but never had.

WHAT YOU'LL LEARN

✅ Why the current approach to value measurement is backwards — we roll costs up to the highest level possible and drill outcomes down to the most granular metric available (handwashing rates, readmission rates, A1C), when what's needed is the exact opposite: unit-level costs via time-driven activity-based costing (TDABC) and whole-person, patient-reported outcomes across the full care journey

✅ How the Operative Value Index creates a common mathematical language — combining TDABC-derived costs with condition-specific patient-reported outcomes into a quotient that can compare surgeons, practices, or health systems, risk-adjusted for key confounders, giving self-funded employers something concrete to steer and tier toward

✅ Why appropriateness is the foundation of quality: a surgeon who sends patients to PT when that's the highest-value next step will look like a rockstar on OVI bubble charts — better patient-reported outcomes, lower total spend — while a surgeon who operates on everyone looks great under fee-for-service and terrible under any value-based framework

✅ How bubble chart transparency alone drove clinician behavior change without any payment incentive — surgeons are competitive, and once they can see where their bubble sits relative to peers on a value plot, the gears start turning immediately

✅ Why TDABC is existential for surgeons as procedural bundles expand: if a payer offers a fixed payment for a 90-day spinal fusion global, a surgeon who doesn't know their true cost of delivering that episode is going to get screwed — and there's no way to know which patients are favorable for a bundle without that cost infrastructure

✅ The "Yahoo vs. Google" moment: maximizing fee-for-service volume is Yahoo — stable, dominant, and confident it understands the business model. The ability to actually deliver and quantify high value is Google. Yahoo laughed. Until it didn't.

WHY THIS MATTERS

The value equation — outcomes divided by cost — is recited at every value-based care conference. But across most of this sector, both numbers are question marks. The OVI is an attempt to make them real, scalable, and comparable. When that infrastructure exists, self-funded employers can finally make intelligent direct contracting decisions. Clinical organizations that genuinely deliver high value can finally prove it. And the learning healthcare system — where transparency drives a feedback loop of improvement — becomes something more than a slogan.

=== LINKS ===
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00:00 Introduction to this episode.

00:38 The goal of this episode.

01:28 What the Operative Value Index (OVI) is.

02:04 A quick episode overview.

04:23 EP434 with Benjamin Schwartz, MD, MBA.

04:44 How this episode came about.

09:24 How Dr. Siva got involved in the research around outcomes and costs.

11:51 How the value equation doesn't add up to true quality.

14:12 What measuring quality across the entire care journey means.

15:00 EP326 with Rishi Wadhera, MD, MPP.

15:08 EP295 with Rebecca Etz, PhD.

16:07 Why appropriateness is the foundation of quality.

19:08 Why practicing clinicians need to be thinking about the true costs of delivering care.

21:20 Time-driven activity-based costing (TDABC).

23:44 The two things that must be known for value-based care to succeed.

24:06 Article by Dana Prommel Strauss.

27:09 A quick summary of the conversation thus far.

30:42 The power of transparency in Dr. Siva's bubble plots.

32:39 EP449 with Marty Makary, MD, MPH.

34:05 Why these bubble plots work not just at the procedural level but at the diagnosis level, too.

36:13 EP503 with Ryan Wells; Leo Spector, MD, MBA; and Adam Stavisky.

36:21 EP501 with Ivana Krajcinovic, PhD.

36:30 EP398 with Jacob Asher, MD.

37:28 The "big blue ocean" opportunity for forward-looking providers.

38:52 Substack post by John Lee, MD.

40:37 The incredible opportunity for entities and groups that can help provide the infrastructure needed for this value index.

41:42 Essay written by Dr. Siva.

43:19 Last thoughts by Dr. Siva on TDABC and competition on value.