For diabetes, for example, providers measure the reliability of their LDL cholesterol checks and hemoglobin A1c levels, even though what really matters to patients is whether they are likely to lose their vision, need dialysis, have a heart attack or stroke, or undergo an amputation. All are already being implemented to varying degrees in organizations ranging from leading academic medical centers to community safety-net hospitals. Similarly, health insurers that are slow to embrace and support the value agenda—by failing, for example, to favor high-value providers—will lose subscribers to those that do. We call it the “value agenda.” It will require restructuring how health care delivery is organized, measured, and reimbursed. 1) An IPU is organized around a medical condition or a set of closely related conditions (or around defined patient segments for primary care). Exacerbating the problem, the proportion of patients covered by government programs is growing: Medicaid will expand substantially in many states in 2014, as the Affordable Care Act is implemented, and the aging of the population will increase the percentage of Medicare patients for years beyond that. This transformation must come from within. The Strategy That Will Fix Health Care Providers must lead the way in making value the overarching goal by Michael E. Porter and Thomas H. Lee The Big Idea THE STRATEGY THAT WILL FIX HEALTH CARE 2 Harvard Business Review October 2013 FOR ARTICLE REPRINTS CALL 800-988-0886 OR 617-783-7500, OR VISIT HBR.ORG Michael E. Porter is the Access to poor care is not the objective, nor is reducing cost at the expense of quality. (For more, see Michael Porter’s article “Measuring Health Outcomes: The Outcome Hierarchy,” New England Journal of Medicine, December 2010.) Increasing profits is today misaligned with the interests of patients, because profits depend on increasing the volume of services, not delivering good results. 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. 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. 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. A hip replacement that lasts two years is inferior to one that lasts 15 years, from both the patient’s perspective and the provider’s. 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. Regulations intended to reduce self-dealing can actually impede progress toward improving value, by inhibiting integrated care across specialties. Outcomes are also starting to be incorporated in real time into the process of care, allowing providers to track progress as they interact with patients. Organizations that fail to improve value, no matter how prestigious and powerful they seem today, are likely to encounter growing pressure. Yet every other stakeholder in the health care system has a role to play. (For more, see Robert Kaplan and Michael Porter’s article “How to Solve the Cost Crisis in Health Care,” HBR September 2011.). 5) Patient education, engagement, and follow-up are integrated into care. Instead, most hospital cost-accounting systems are department-based, not patient-based, and designed for billing of transactions reimbursed under fee-for-service contracts. A simple “stress test” question to gauge the accessibility of the data in an IT system is: Can visiting nurses see physicians’ notes, and vice versa? Providers must lead the way in making value the overarching goal. 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). In the U.S., bundled payments have become the norm for organ transplant care. The Strategy That Will Fix Health Care Thomas H. Lee, MD Chief Medical Officer, Press Ganey October 2, 2014 . Rapid advances in medical knowledge constantly improve the state of the art, which means that providers are measured on compliance with guidelines that are often outdated. 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 … Please click on the image to … 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 challenge of becoming a value-based organization should not be underestimated, given the entrenched interests and practices of many decades. 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. Outcomes should be measured by medical condition (such as diabetes), not by specialty (podiatry) or intervention (eye examination). (See the exhibit “Outcomes Measurement and Reporting Drive Improvement.”). For example, high readmission rates and frequent emergency-department “bounce backs” may not actually worsen long-term survival, but they are expensive and frustrating for both providers and patients. The transformation to value-based health care is well under way. Those providers that increase value will be the most competitive. Big Med - Quality Control for Patients Everywhere. 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. That’s because IT is just a tool; automating broken service-delivery processes only gets you more-efficient broken processes. Medicine is changing — and so must doctors. 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. 3) Providers see themselves as part of a common organizational unit. Armed with those data, they work to improve care—by establishing new protocols and devising better or more efficient ways to engage patients, including group visits and virtual interactions. Virginia Mason has also increased revenue through increased productivity, rather than depending on more fee-for-service visits to drive revenue from unneeded or duplicative tests and care. In deciding to drop those visits, clinicians realized that maybe local patients do not need routine postoperative visits either. If providers can improve patient outcomes, they can sustain or grow their market share. Identify key … 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. A program recently introduced by the California Public Employees’ Retirement System (CalPERS) and Anthem Blue Cross, for example, requires many employees seeking a hip or knee replacement to use only hospitals that have agreed to a bundled fee for the procedure—or to pay the difference if they choose a higher-priced provider outside the network. In health care, the days of business as usual are over. 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. Listen to The Strategy That Will Fix Health Care (Harvard Business Review) Audiobook by Michael E. Porter, Thomas H. Lee, narrated by Todd Mundt Providers are improving their understanding of what outcomes to measure and how to collect, analyze, and report outcomes data. 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. For most patients, however, physical therapy is the most effective next intervention, and their treatment often begins the same day. (See the sidebar “What Is an Integrated Practice Unit?”). They meet frequently, formally and informally, and review data on their own performance. 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. 2 A Historic Moment of Turmoil – and Opportunity We have similar challenges in health care -- throughout the world Irresistible drivers of change include: Expert systems help clinicians identify needed steps (for example, follow-up for an abnormal test) and possible risks (drug interactions that may be overlooked if data are simply recorded in free text, for example). Yet every other stakeholder in the health care system has a role to play. “Moving to a high-value health care delivery system has six components that are interdependent and mutually reinforcing,” state Porter and Lee. With bundled prices in place, IPUs have stronger incentives to work as teams and 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. Patients, health plans, employers, and suppliers can hasten the transformation—and all will benefit greatly from doing so. 11) Joint accountability is accepted for outcomes and costs. © 2020 SurgeonCheck LLC. Corpus ID: 167036960. Alternate funding sources must be sourced. Harvard Business Publishing is an affiliate of Harvard Business School. Despite noble mission statements, the real work of improving value is left undone. And when outcomes are measured comprehensively, results invariably improve. Similarly, health insurers that are slow to embrace and support the value agenda—by failing, for example, to favor high-value providers—will lose subscribers to those that do. 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. 4. 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. Healthcare will need to be technologically enabled, with comprehensive electronic health record systems, patient access to medical information, and the ability to obtain care using mobile and video technologies. No organization, however, has yet put in place the full value agenda across its entire practice. UCLA’s kidney transplant program, for example, has grown dramatically since pioneering a bundled price arrangement with Kaiser Permanente, in 1986, and offering the payment approach to all its payors shortly thereafter. Even in today’s most advanced systems, the critical capability to create and extract such data remains poorly developed. There are huge opportunities for improving value as providers integrate systems to eliminate the fragmentation and duplication of care and to optimize the types of care delivered in each location. Since public reporting of clinic performance began, in 1997, in vitro fertilization success rates have climbed steadily across all clinics as process improvements have spread. Patients care about mortality rates, of course, but they’re also concerned about their functional status. 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. 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. In health care, that requires a shift from today’s siloed organization by specialty department and discrete service to organizing around the patient’s medical condition. As health care providers come under increasing pressure to lower costs and report outcomes, the existing systems are wholly inadequate. At its core is maximizing value for patients: that is, achieving the best outcomes at the lowest cost. Organizations that progress rapidly in adopting the value agenda will reap huge benefits, even if regulatory change is slow. The strategic agenda for moving to a high-value health care delivery system has six components. The result has been striking improvements in outcomes and efficiency, and growth in market share. In the most effective models, some clinicians rotate among locations, which helps staff members across all facilities feel they are part of the team. In 2006, Michael Porter and Elizabeth Teisberg introduced the value agenda in their book Redefining Health Care. At the core of the value transformation is changing the way clinicians are organized to deliver care. And so on. Since no one measures patient outcomes, how long the process takes, or how much the care costs, the value of care never improves. Most hospitals and physician groups still have positive margins, but the pressure to consider a new strategic framework has increased dramatically. If care coordinators are simply layered on top of a fragmented and dysfunctional delivery system, savings are modest (4% to 7% at best). The result has been striking improvements in outcomes and efficiency, and growth in market share. 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. In measuring quality of care, providers tend to focus on only what they directly control or easily measured clinical indicators. 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. All stakeholders in health care have essential roles to play. These were called hyper-acute stroke units, or HASUs. How We Can Help You | Who We Are Research-based practice guidelines are of course desirable, but compliance with them does not necessarily lead to improved outcomes or efficiency. Some organizations, such as the Cleveland Clinic and Germany’s Schön Klinik, have undertaken large-scale changes involving multiple components of the value agenda. Indeed, rigorous measurement of value (outcomes and costs) is perhaps the single most important step in improving health care. (For more, see the sidebar “Why Change Now?”) The transition will be neither linear nor swift, and we are entering a prolonged period during which providers will work under multiple payment models with varying exposure to risk. In health care, the days of business as usual are over. The answer today at almost all delivery systems is “no.” As different types of clinicians become true team members—working together in IPUs, for example—sharing information needs to become routine. Local affiliates benefit from the expertise, experience, and reputation of the parent IPU—benefits that often improve their market share locally. 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. 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. Access to poor care is not the objective, nor is reducing cost at the expense of quality. The question is, which organizations will lead the way and how quickly can others follow? Such systems also give patients the ability to report outcomes on their care, not only after their care is completed but also during care, to enable better clinical decisions. 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. Second, providers should concentrate the care for each of the conditions they do treat in fewer locations. 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