replace fragmentation to full-service local providers. All this is now changing. Failure to improve value means, well, failure. All Rights Reserved. And so on. Neither of the dominant payment models in health care—global capitation and fee-for-service—directly rewards improving the value of care. The current structure of health care delivery has been sustained for decades because it has rested on its own set of mutually reinforcing elements: organization by specialty with independent private-practice physicians; measurement of “quality” defined as process compliance; cost accounting driven not by costs but by charges; fee-for-service payments by specialty with rampant cross-subsidies; delivery systems with duplicative service lines and little integration; fragmentation of patient populations such that most providers do not have critical masses of patients with a given medical condition; siloed IT systems around medical specialties; and others. In 2011, 60% of all U.S. hospitals were part of such systems, up from 51% in 1999. The strategy that will fix health care: Providers must lead the way in making value the overarching goal. (For more, see Robert Kaplan and Michael Porter’s article “How to Solve the Cost Crisis in Health Care,” HBR September 2011.). The Cleveland Clinic is a provider that has made its electronic record an important enabler of its strategy to put “Patients First” by pursuing virtually all these aims. And we must replace today’s fragmented system, in which every local provider offers a full range of services, with a system in which services for particular medical conditions are concentrated in health-delivery organizations and in the right locations to deliver high-value care. 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 net result is a substantial increase in the number of patients an excellent IPU can serve. The paper "The Strategy That Will Fix Health Care" is a worthy example of an article review on health sciences&medicine. If Tier 1 functional outcomes improve, costs invariably go down. Many employees in these plans are increasingly unwilling or are simply unable to pay historical charges, and providers incur losses or bad publicity, or both, as they try to collect on the debts. We call it the “value agenda.” It will require restructuring how health care delivery is organized, measured, and reimbursed. The first step in solving any problem is to define the proper goal. But the right kind of IT system can help the parts of an IPU work with one another, enable measurement and new reimbursement approaches, and tie the parts of a well-structured delivery system together. 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. In health care, the days of business as usual are over. THE BIG IDEA THE STRATEGY THAT WILL FIX HEALTH CARE This document is authorized for use only in the Health Care Program by Professor Porter and Professor Kaplan at Harvard Business School from December 2013 to June 2014. improve patient outcomes, they can sustain or grow their market share. Outcomes should cover the full cycle of care for the condition, and track the patient’s health status after care is completed. 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. The only true measures of quality are the outcomes that matter to patients. The economics of health care are changing, too. With bundled prices in place, IPUs have stronger incentives to work as teams and to improve the value of care. move from volume and profit to patient outcomes achieved. Is this “The” strategy that will fix health care? 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. 6) The unit has a single administrative and scheduling structure. In this environment, providers need a strategy that transcends traditional cost reduction and responds to new payment models. The best method for understanding these costs is time-driven activity-based costing, TDABC. Care should be directed by IPUs, but recurring services need not take place in a single location. The result has been striking improvements in outcomes and efficiency, and growth in market share. Despite sounding like the silver bullet and being US focussed, it is worth reading for anyone interested in improving healthcare in the UK. Organizations that progress rapidly in adopting the value agenda will reap huge benefits, even if regulatory change is slow. Jeanne Pinder October 9, 2013 . In the prevailing approach, patients receive portions of their care from a variety of types of clinicians, usually in several different locations, who function more like a spontaneously assembled “pickup team” than an integrated unit. At its core is maximizing value for patients: that is, achieving the best outcomes at the lowest cost. Reimbursement rates are under pressure. Existing costing systems are fine for overall department budgeting, but they provide only crude and misleading estimates of actual costs of service for individual patients and conditions. The Strategy That Will Fix Health Care. Contrast that with the approach taken by the IPU at Virginia Mason Medical Center, in Seattle. By 2012, 22% of radiation treatment and 15% of all chemotherapy treatment were performed at regional sites, along with about 5% of surgery. Although limiting the range of service lines offered has traditionally been an unnatural act in health care—where organizations strive to do everything for everyone—the move to a value-based delivery system will require those kinds of choices. However, measuring the full set of outcomes that matter to patients by condition is essential in meeting their needs. 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. Measuring outcomes is likely to be the first step in focusing everyone’s attention on what matters most.All stakeholders in health care have essential roles to play. Different patient groups require different teams, different types of services, and even different locations of care. Then the cost of caring for a condition can be compared with the outcomes achieved. In 2006, Michael Porter and Elizabeth Teisberg introduced the value agenda in their book Redefining Health Care. 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. How to Solve the Cost Crisis in Health Care. No organization, however, has yet put in place the full value agenda across its entire practice. 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. The Strategy That Will Fix Health Care – Harvard Business Review . We call it the “value agenda.” It will require restructuring how health care delivery is organized, measured, and reimbursed. The level of discomfort during care and how long it takes to return to normal activities also matter greatly to patients. We believe that concerns will fall away over time, as sophistication grows and the evidence mounts that embracing payments aligned with delivering value is in providers’ economic interest. If care coordinators are simply layered on top of a fragmented and dysfunctional delivery system, savings are modest (4% to 7% at best). Providers are rewarded for increasing volume, but that does not necessarily increase value. When coordination takes place organically in IPUs, savings can reach 30% or more. To date, incentives that encourage people to be better health care “consumers” have done little more than shift costs to patients. While health care organizations have never been against improving outcomes, their central focus has been on growing volumes and maintaining margins. Around the world, every health care system is struggling with rising costs and uneven quality despite the hard work of well-intentioned, well-trained clinicians. In the U.S., an increasing percentage of patients are being covered by Medicare and Medicaid, which reimburse at a fraction of private-plan levels. The challenge of becoming a value-based organization should not be underestimated, given the entrenched interests and practices of many decades. Making this transformation is not a single step but an overarching strategy. But introducing EMR without restructuring care delivery, measurement, and payment yields limited benefits. The challenge of becoming a value-based organization should not be underestimated, given the entrenched interests and practices of many decades. In a world where fees just keep going up, that makes sense. Organizations that fail to improve value, no matter how prestigious and powerful they seem today, are likely to encounter growing pressure. For example, the Stockholm County Council initiated such a program in 2009 for all total hip and knee replacements for relatively healthy patients. Some acid-test questions to gauge board members’ and health system leaders’ appetite for transformation include: Are you ready to give up service lines to improve the value of care for patients? It’s time for a fundamentally new strategy. Regulations intended to reduce self-dealing can actually impede progress toward improving value, by inhibiting integrated care across specialties. They are expert in the condition, know and trust one another, and coordinate easily to minimize wasted time and resources. At the time, there were too many hospitals providing acute stroke care in London (32 of them) to allow any to amass a high volume. MD Anderson, for example, has four satellite sites in the greater Houston region where patients receive chemotherapy, radiation therapy, and, more recently, low-complexity surgery, under the supervision of a hub IPU. A new way to measure costs and compare them with outcomes. Its outcomes are among the best nationally, and UCLA’s market share in organ transplantation has expanded substantially. Harvard Business Review (October): 50-67. For community providers, this may mean exiting or establishing partnerships in complex service lines, such as cardiac surgery or care for rare cancers. Providers will adopt bundles as a tool to grow volume and improve value. Well-designed bundled payments directly encourage teamwork and high-value care. Yet every other stakeholder in the health care system has a role to play. How We Can Help You | Who We Are 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. Some organizations are still at the stage of pilots and initiatives in individual practice areas. For the most part, the solutions have focused on the levers that particular stakeholders can push and have been designed to preserve existing roles. 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. The payment approach best aligned with value is a bundled payment that covers the full care cycle for acute medical conditions, the overall care for chronic conditions for a defined period (usually a year), or primary and preventive care for a defined patient population (healthy children, for instance). And prices can vary by more than 50% for the same procedure in the same hospital, depending on the patient’s insurer and the insurance product. “How to Solve the Cost Crisis in Health Care,”, Loss of mobility due to inadequate rehabilitation, Stiff knee due to unrecognized complications. Is relocating service lines on the table? The authors claim “Organizations that progress rapidly in adopting the value agenda will reap huge benefits, even if regulatory change is slow.” However, if it is expected to actually impact the overall industry it would require wide-scale adoption and this seems an unlikely outcome. Progress will be greatest if multiple components are advanced together. Virginia Mason did not address the problem of chaotic care by hiring coordinators to help patients navigate the existing system—a “solution” that does not work. The percentage of the population in high-deductible health plans is now well into double digits, and it is rising. Patients, health plans, employers, and suppliers can hasten the transformation—and all will benefit greatly from doing so. At Geisinger Health System, in Pennsylvania, for example, the care for patients with chronic conditions such as diabetes and heart disease involves not only physicians and other clinicians but also pharmacists, who have major responsibility for following and adjusting medications. 9) The team measures outcomes, costs, and processes for each patient using a common measurement platform. It is now moving toward giving patients full access to clinician notes—another way to improve care for patients. In value-enhancing systems, the data needed to measure outcomes, track patient-centered costs, and control for patient risk factors can be readily extracted using natural language processing. A welcomed competition is emerging to be the most comprehensive and transparent provider in measuring outcomes. Filed Under: Costs, Health reform. 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. Other patients will require surgery and will enter a process for that. Instead, most hospital cost-accounting systems are department-based, not patient-based, and designed for billing of transactions reimbursed under fee-for-service contracts. 4. Here is a quick summary: The goal is ‘value’ The Strategy that Will Fix Health Care Professor Michael E. Porter and Dr. Thomas H. Lee September 24, 2013 This presentation draws on Porter, Michael E. and Thomas H. Lee. We are going to have to be able to communicate exactly what we are giving patients, employers, and insurers for their money.” He’s right. The first step in solving any problem is to define the proper goal. Unfortunately, most multisite organizations are not true delivery systems, at least thus far, but loose confederations of largely stand-alone units that often duplicate services. The transformation to value-based health care is well under way. Every organization has room for improvement in value for patients—and always will. Patients, health plans, employers, and suppliers can hasten the transformation—and all will benefit greatly from doing so. There are huge value improvement opportunities in matching the complexity and skills needed with the resource intensity of the location, which will not only optimize cost but also increase staff utilization and productivity. The current structure of health care delivery has been sustained for decades because it has rested on its own set of mutually reinforcing elements: organization by specialty with independent private-practice physicians; measurement of “quality” defined as process compliance; cost accounting driven not by costs but by charges; fee-for-service payments by specialty with rampant cross-subsidies; delivery systems with duplicative service lines and little integration; fragmentation of patient populations such that most providers do not have critical masses of patients with a given medical condition; siloed IT systems around medical specialties; and others. 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. All are already being implemented to varying degrees in organizations ranging from leading academic medical centers to community safety-net hospitals. For a field in which high cost is an overarching problem, the absence of accurate cost information in health care is nothing short of astounding. Better care has actually lowered costs, a point we will return to later. 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). Management estimated the total cost reduction resulting from the shift at 30% to 40%. Patients care about mortality rates, of course, but they’re also concerned about their functional status. Access to poor care is not the objective, nor is reducing cost at the expense of quality. Tier 2 outcomes relate to the nature of the care cycle and recovery. Patients often get their initial evaluation and development of a treatment plan at the hub, but some or much care takes place at more-convenient (and cost-effective) locations. Please click on the image to … Take, for example, care for patients with low back pain—one of the most common and expensive causes of disability. These pressures are leading more independent hospitals to join health systems and more physicians to move out of private practice and become salaried employees of hospitals. As IPUs’ outcomes improve, so will their reputations and, therefore, their patient volumes. “Moving to a high-value health care delivery system has six components that are interdependent and mutually reinforcing,” state Porter and Lee. Local affiliates benefit from the expertise, experience, and reputation of the parent IPU—benefits that often improve their market share locally. A recurring theme is the need for reforms in the health care sector. Providers that cling to today’s broken system will become dinosaurs. We call it the “value agenda.” It will require restructuring how health care delivery is organized, measured, and reimbursed. 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. If any Tier 2 or 3 outcomes improve, costs invariably go down. Information technology is a powerful tool for enabling value-based care. But the opportunity to substantially enhance value in primary care is far broader. 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. Those proportions are even higher today. Data are aggregated around patients, not departments, units, or locations. 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