This transformation must come from within. Yet every other stakeholder in the health care system has a role to play. A provider’s ability to increase fee-for-service revenue is threatened from every direction. A recent study of the relationship between hospital volume and operative mortality for high-risk types of cancer surgery, for example, found that as hospital volumes rose, the chances of a patient’s dying as a result of the surgery fell by as much as 67%. We call it the “value agenda.” It will require restructuring how health care delivery is organized, measured, and reimbursed. Providers that concentrate volume will drive a virtuous cycle, in which teams with more experience and better data improve value more rapidly—attracting still more volume. Their boards and senior leadership teams must have the vision and the courage to commit to the value agenda, and the discipline to progress through the inevitable resistance and disruptions that will result. By failing to consistently measure the outcomes that matter, we lose perhaps our most powerful lever for cost reduction. How to Solve the Cost Crisis in Health Care. Here is a quick summary: The goal is ‘value’ 8) A physician team captain or a clinical care manager (or both) oversees each patient’s care process. News & Resources | Contact Us. Clinicians and administrators battle over arbitrary cuts, rather than working together to improve the value of care. They also require services to address head-on the crucial role of lifestyle change and preventive care in outcomes and costs, and those services must be tailored to patients’ overall circumstances. At its core is maximizing value for patients: that is, achieving the best outcomes at the lowest cost. Harvard Business Review (October): 50-67. In Germany, bundled payments for hospital inpatient care—combining all physician fees and other costs, unlike payment models in the U.S.—have helped keep the average payment for a hospitalization below $5,000 (compared with more than $19,000 in the U.S., even though hospital stays are, on average, 50% longer in Germany). Providers are achieving savings of 25% or more by tapping opportunities such as better capacity utilization, more-standardized processes, better matching of personnel skills to tasks, locating care in the most cost-effective type of facility, and many others. Patients, then, are often much better off traveling longer distance to obtain care at locations where there are teams with deep experience in their condition. The strategy that will fix health care: Providers must lead the way in making value the overarching goal. If value is to be substantially increased on a large scale, however, superior providers for particular medical conditions need to serve far more patients and extend their reach through the strategic expansion of excellent IPUs. Only physicians and provider organizations can put in place the set of interdependent steps needed to improve value, because ultimately value is determined by how medicine is practiced. Embracing the goal of value at the senior management and board levels is essential, because the value agenda requires a fundamental departure from the past. Hospitals with private-practice physicians will have to learn to function as a team to remain viable. UCL Partners, a delivery system comprising six well-known teaching hospitals that serve North Central London, had two hospitals providing stroke care—University College London Hospital and the Royal Free Hospital—located less than three miles apart. “Doctors will educate their patients more often about … 4) The team takes responsibility for the full cycle of care for the condition, encompassing outpatient, inpatient, and rehabilitative care, and supporting services (such as nutrition, social work, and behavioral health). Big Med - Quality Control for Patients Everywhere. They are expert in the condition, know and trust one another, and coordinate easily to minimize wasted time and resources. In 2011, 60% of all U.S. hospitals were part of such systems, up from 51% in 1999. This interlocking structure explains why the current system has been so resistant to change, why incremental steps have had little impact (see the sidebar “No Magic Bullets”), and why simultaneous progress on multiple components of the strategic agenda is so beneficial. The impact on value has been striking. A value-enhancing IT platform has six essential elements: The system follows patients across services, sites, and time for the full cycle of care, including hospitalization, outpatient visits, testing, physical therapy, and other interventions. For academic medical centers, which have more heavily resourced facilities and staff, this may mean minimizing routine service lines and creating partnerships or affiliations with lower-cost community providers in those fields. In most health care organizations there is virtually no accurate information on the cost of the full cycle of care for a patient with a particular medical condition. Providers that adopted bundle approaches early benefitted. The question is, which organizations will lead the way and how quickly can others follow? Embracing the goal of value at the senior management and board levels is essential, because the value agenda requires a fundamental departure from the past. Despite sounding like the silver bullet and being US focussed, it is worth reading for anyone interested in improving healthcare in the UK. Among the features of the German system are care guarantees under which the hospital bears responsibility for the cost of rehospitalization related to the original care. A welcomed competition is emerging to be the most comprehensive and transparent provider in measuring outcomes. Organizing into IPUs makes proper measurement of outcomes and costs easier. We call it the “value agenda.” It will require restructuring how health care delivery is organized, measured, and reimbursed. Duplication of effort, delays, and inefficiency is almost inevitable. It’s time for a fundamentally new strategy. Instead, most hospital cost-accounting systems are department-based, not patient-based, and designed for billing of transactions reimbursed under fee-for-service contracts. Making this transformation is not a single step but an overarching strategy. Increasing profits is today misaligned with the interests of patients, because profits depend on increasing the volume of services, not delivering good results. Well-designed bundled payments directly encourage teamwork and high-value care. In health care, the days of business as usual are over. Consider how providers participating in Walmart’s program are changing the way they provide care. In our state, Massachusetts, the price for a brain MRI ranges from $625 to $1,650. Local affiliates benefit from the expertise, experience, and reputation of the parent IPU—benefits that often improve their market share locally. Meanwhile, national retailers like Walmart, CVS, and Walgreens are going after the primary care market on a large scale, by offering in-store clinics that provide basic services at prices as much as 40% below what physicians’ offices charge. For most providers, creating IPUs and measuring outcomes and costs should take the lead. Their boards and senior leadership teams must have the vision and the courage to commit to the value agenda, and the discipline to progress through the inevitable resistance and disruptions that will result. Since the shift, mortality associated with strokes at University College has fallen by about 25% and costs per patient have dropped by 6%. The IPU provides management oversight for clinical care, and some clinical staff members working at the affiliate may be employed by the parent IPU. The final component of health system integration is to integrate care for individual patients across locations. In this environment, providers need a strategy that transcends traditional cost reduction and responds to new payment models. But the days of charging higher fees for routine services in high-cost settings are quickly coming to an end. No organization, however, has yet put in place the full value agenda across its entire practice. It is not surprising that the public remains indifferent to quality measures that may gauge a provider’s reliability and reputation but say little about how its patients actually do. (See the exhibit “The Value Agenda.”). Efforts to reform health care have been hobbled by lack of clarity about the goal, or even by the pursuit of the wrong goal. In the most effective models, some clinicians rotate among locations, which helps staff members across all facilities feel they are part of the team. Patients with low back pain call one central phone number (206-41-SPINE), and most can be seen the same day. Those with serious causes of back pain (such as a malignancy or an infection) are quickly identified and enter a process designed to address the specific diagnosis. The stated promise of consumer-oriented health care—“We do everything you need close to your home or workplace”—has been a good marketing pitch but a poor strategy for creating value. U.S. government payors (Medicare and Medicaid) raise payment levels each year minimally, if at all. In this paper, the focus is on the article The Strategy That Will Fix Health Care, published in Harvard Business Review on October 2013, written by Porter and Lee. In health care, the days of business as usual are over. Those providers that increase value will be the most competitive. Summary by James R. Martin, Ph.D., CMA Professor Emeritus, University of South Florida In case you missed it, in the fresh off the press October 2013 issue of Harvard Business Review, Michael E. Porter and Thomas H. Lee set off with a very grand statement, “The Strategy That Will Fix Health Care“. This transformation must come from within. Access to services, insurance, advice, prevention, public health, nutrition None of them tackle the underlying strategic and structural problems that work against value for patients. Providers that cling to today’s broken system will become dinosaurs. In 2006, Michael Porter and Elizabeth Teisberg introduced the value agenda in their book Redefining Health Care. For example, many hospitals routinely have patients return to see the cardiac surgeon six to eight weeks after surgery, but out-of-town visits seem difficult to justify for patients with no obvious complications. Providers are improving their understanding of what outcomes to measure and how to collect, analyze, and report outcomes data. Here’s how. Research-based practice guidelines are of course desirable, but compliance with them does not necessarily lead to improved outcomes or efficiency. © 2020 SurgeonCheck LLC. Disutility of care or treatment process (for instance, diagnostic errors, ineffective care, treatment-related discomfort, complications, adverse effects), Long-term consequences of therapy (for instance, care-induced illnesses). Jeanne Pinder October 9, 2013 . Patients, health plans, employers, and suppliers can hasten the transformation—and all will benefit greatly from doing so. UCL Partners later moved all emergency vascular surgery and complex aortic surgery to Royal Free. In an IPU, personnel work together regularly as a team toward a common goal: maximizing the patient’s overall outcomes as efficiently as possible. A new way to measure costs and compare them with outcomes. National Institutes of Health research cuts will make matters even worse for academic medical centers. HEDIS (the Healthcare Effectiveness Data and Information Set) scores consist entirely of process measures as well as easy-to-measure clinical indicators that fall well short of actual outcomes. Regulations intended to reduce self-dealing can actually impede progress toward improving value, by inhibiting integrated care across specialties. And so on. 3) Providers see themselves as part of a common organizational unit. Market forces are driving increasing numbers of hospital mergers and acquisitions, and the number of hospital beds has declined in the U.S. from 3 beds per 1,000 people in 1999 to 2.6 in 2010. move from volume and profit to patient outcomes achieved. At its core is maximizing value for patients: that is, achieving the best outcomes at the lowest cost. Those days are over. Progress will be greatest if multiple components are advanced together. 1) An IPU is organized around a medical condition or a set of closely related conditions (or around defined patient segments for primary care). The range of outcomes measured remains limited, but the Clinic is expanding its efforts, and other organizations are following suit. If providers can improve patient outcomes, they can sustain or grow their market share. Organize into Integrated Practice Units (IPUs) At the core of the value transformation is changing … If they can improve the efficiency Corpus ID: 167036960. As providers distribute services in the care cycle across locations, they must learn to tie together the patient’s care across these sites. The complexity of meeting their heterogeneous needs has made value improvement very difficult in primary care—for example, heterogeneous needs make outcomes measurement next to impossible. Patients care about mortality rates, of course, but they’re also concerned about their functional status. Superior IPUs will be sought out as partners of choice, enabling them to expand across their local regions and beyond. Because proper cost data are so critical to overcoming the many barriers associated with legacy processes and systems, we often tell skeptical clinical leaders: “Cost accounting is your friend.” Understanding true costs will finally allow clinicians to work with administrators to improve the value of care—the fundamental goal of health care organizations. In the past, providers would cover losses from Medicare and Medicaid and from uninsured populations by demanding higher payment rates from commercial insurance plans—often winning increases of 8% to 10% per year. All are already being implemented to varying degrees in organizations ranging from leading academic medical centers to community safety-net hospitals. Capitation motivates providers to offer every service line in an attempt to keep spending internal, instead of providing only services where they can offer excellent value. Integrating mechanisms, such as assigning a single physician team captain for each patient and adopting common scheduling and other protocols, help ensure that well-coordinated, multidisciplinary care is delivered in a cost-effective and convenient way. Employees bear no out-of-pocket costs for their care—travel, lodging, and meals for the patient and a caregiver are provided—as long as the surgery is performed at one of the centers of excellence. While health care organizations have never been against improving outcomes, their central focus has been on growing volumes and maintaining margins. What happens next is unpredictable. In 2009, the city of London set out to improve survival and prospects for stroke patients by ensuring that patients were cared for by true IPUs—dedicated, state-of-the-art teams and facilities including neurologists who were expert in the care of stroke. Filed Under: Costs, Health reform. The strategy for moving to a high-value health care delivery system comprises six interdependent components: organizing around patients' medical conditions rather than physicians' medical specialties, measuring costs and outcomes for each patient, developing bundled prices for the full care cycle, integrating care across separate facilities, expanding geographic reach, and building an enabling IT … All rights reserved. Over the past half dozen years, a growing array of providers have begun to embrace true outcome measurement. Most “quality” metrics do not gauge quality; rather, they are process measures that capture compliance with practice guidelines. Numerous studies confirm that volume in a particular medical condition matters for value. Achieve best outcomes at the lowest cost. This Harvard Business review talks about the strategy that will fix health care written by Michael. Take, for example, the Fertility Clinic Success Rate and Certification Act of 1992, which mandated that all clinics performing assisted reproductive technology procedures, notably in vitro fertilization, provide their live birth rates and other metrics to the Centers for Disease Control. In many cases, current reimbursement schemes still reward providers for performing services in a hospital setting, offering even higher payments if the hospital is an academic medical center—another example of how existing reimbursement models have worked against value. Improving value requires either improving one or more outcomes without raising costs or lowering costs without compromising outcomes, or both. After the CDC began publicly reporting those data, in 1997, improvements in the field were rapidly adopted, and success rates for all clinics, large and small, have steadily improved. The clinic sees about 2,300 new patients per year compared with 1,404 under the old system, and it does so in the same space and with the same number of staff members. But those results can be achieved only through a restructuring of work. It is now moving toward giving patients full access to clinician notes—another way to improve care for patients. We must move away from a supply-driven health care system organized around what physicians do and toward a patient-centered system organized around what patients need. For example, patients with low back pain may receive an initial evaluation, and surgery if needed, from a centrally located spine IPU team but may continue physical therapy closer to home. The hospitals are reimbursed for the care with a single bundled payment that includes all physician and hospital costs associated with both inpatient and outpatient pre- and post-operative care. Care should be directed by IPUs, but recurring services need not take place in a single location. (For more, see Michael Porter’s article “Measuring Health Outcomes: The Outcome Hierarchy,” New England Journal of Medicine, December 2010.) (For more, see Robert Kaplan and Michael Porter’s article “How to Solve the Cost Crisis in Health Care,” HBR September 2011.). The outcomes that matter to patients for a particular medical condition fall into three tiers. University College was selected to house the new stroke unit. Information technology is a powerful tool for enabling value-based care. That often means driving past the closest hospitals. New models of delivering routine primary care in lower-cost settings (such as retail clinics) have a role, but they will do little to address the bulk of health care costs, most of which are generated by care for more-complex diseases. For example, some of our colleagues at Partners HealthCare in Boston are testing innovative technologies such as tablet computers, web portals, and telephonic interactive systems for collecting outcomes data from patients after cardiac surgery or as they live with chronic conditions such as diabetes. Those concerns are legitimate, but they are present in any reimbursement model. They meet frequently, formally and informally, and review data on their own performance. Every organization has room for improvement in value for patients—and always will. In the case of prostate cancer treatment, for example, five-year survival rates are typically 90% or higher, so patients are more interested in their providers’ performance on crucial functional outcomes, such as incontinence and sexual function, where variability among providers is much greater. Today’s primary care practice applies a common organizational structure to the management of a very wide range of patients, from healthy adults to the frail elderly. As IPUs’ outcomes improve, so will their reputations and, therefore, their patient volumes. IPUs not only provide treatment but also assume responsibility for engaging patients and their families in care—for instance, by providing education and counseling, encouraging adherence to treatment and prevention protocols, and supporting needed behavioral changes such as smoking cessation or weight loss. Making this transformation is not a single step but an overarching strategy. The only true measures of quality are the outcomes that matter to patients. Narrow goals such as improving access to care, containing costs, and boosting profits have been a distraction. Other organizations, such as the Cleveland Clinic and Germany’s Schön Klinik, have undertaken large-scale changes involving multiple components of the value agenda. Those proportions are even higher today. Concentrating volume is essential if integrated practice units are to form and measurement is to improve. The inclusion of pharmacists on teams has resulted in fewer strokes, amputations, emergency department visits, and hospitalizations, and in better performance on other outcomes that matter to patients. Terminology and data fields related to diagnoses, lab values, treatments, and other aspects of care are standardized so that everyone is speaking the same language, enabling data to be understood, exchanged, and queried across the whole system. Reimbursement rates are under pressure. The strategy for moving to a high-value health care delivery system comprises six interdependent components: organizing around patients’ medical conditions rather than physicians’ medical specialties, measuring costs and outcomes for each patient, developing bundled prices for the full care cycle, integrating care across separate facilities, expanding geographic reach, and building … Health care leaders and policy makers have tried countless incremental fixes—attacking fraud, reducing errors, enforcing practice guidelines, making patients better “consumers,” implementing electronic medical records—but none have had much impact. That’s because IT is just a tool; automating broken service-delivery processes only gets you more-efficient broken processes. At the individual IPU level, numerous providers are beginning efforts. Organizations that fail to improve value, no matter how prestigious and powerful they seem today, are likely to encounter growing pressure. Identify key … Geographic expansion should focus on improving value, not just increasing volume. Many of the leaders have seen their reputations—and market share—improve as a result. They’re also questioning existing practices. 10) The providers on the team meet formally and informally on a regular basis to discuss patients, processes, and results. The components of the strategic agenda are not theoretical or radical. We must shift the focus from the volume and profitability of services provided—physician visits, hospitalizations, procedures, and tests—to the patient outcomes achieved. We call it the “value agenda.” It will require restructuring how health care delivery is organized, measured, and reimbursed. The Strategy That Will Fix Health Care Providers must lead the way in making value the overarching goal @inproceedings{Porter2013TheST, title={The Strategy That Will Fix Health Care Providers must lead the way in making value the overarching goal}, author={M. E. Porter and T. H. Lee}, year={2013} } The transformation to value-based health care is well under way. The six components of the value agenda are distinct but mutually reinforcing. The preceding five components of the value agenda are powerfully enabled by a sixth: a supporting information technology platform. Concentrating volume is among the most difficult steps for many organizations, because it can threaten both prestige and physician turf. 10, October 2013 (subscription required) In health care, the days of business as usual are over. Significant delays before seeing a specialist for a potentially ominous complaint can cause unnecessary anxiety, while delays in commencing treatment prolong the return to normal life. Less complex conditions and routine services should be moved out of teaching hospitals into lower-cost facilities, with charges set accordingly. 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