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. Reimbursement rates are under pressure. 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. Summarize the scenario, but do not restate the scenario. (See the sidebar “Next Steps: Other Stakeholder Roles.”) Yet providers must take center stage. The result has been striking improvements in outcomes and efficiency, and growth in market share. This approach is already starting to be applied to high-risk, high-cost patients through so-called Patient-Centered Medical Homes. With bundled prices in place, IPUs have stronger incentives to work as teams and to improve the value of care. Most “quality” metrics do not gauge quality; rather, they are process measures that capture compliance with practice guidelines. The best method for understanding these costs is time-driven activity-based costing, TDABC. Despite noble mission statements, the real work of improving value is left undone. 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. The result has been striking improvements in outcomes and efficiency, and growth in market share. Providers are rewarded for increasing volume, but that does not necessarily increase value. All are already being implemented to varying degrees in organizations ranging from leading academic medical centers to community safety-net hospitals. Disappointment with their limited impact has created skepticism that value improvement in health care is possible and has led many to conclude that the only solution to our financial challenges in health care is to ration services and shift costs to patients or taxpayers. 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. 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). The Strategy That Will Fix Health Care. Narrow goals such as improving access to care, containing costs, and boosting profits have been a distraction. Even when functional outcomes are equivalent, patients whose care process is timely and free of chaos, confusion, and unnecessary setbacks experience much better care than those who encounter delays and problems along the way. No organization, however, has yet put in place the full value agenda across its entire practice. Targeted geographic expansion by leading providers is rapidly increasing, with dozens of organizations such as Vanderbilt, Texas Children’s, Children’s Hospital of Philadelphia, MD Anderson Cancer Center, and many others taking bold steps to serve patients over a wide geographic area. Clinicians must prioritize patients’ needs and patient value over the desire to maintain their traditional autonomy and practice patterns. For each IPU, satellite facilities are established and staffed at least partly by clinicians and other personnel employed by the parent organization. Few clinicians have any knowledge of what each component of care costs, much less how costs relate to the outcomes achieved. 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. They are interdependent and mutually reinforcing; as we will see, progress will be easiest and fastest if they are advanced together. 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. In health care, the days of business as usual are over. The intensifying pressure from employers and insurers for transparent pricing is already beginning to force providers to explain—or eliminate—hard-to-justify price variations. Access to services, insurance, advice, prevention, public health, nutrition Consider how providers participating in Walmart’s program are changing the way they provide care. The first step in solving any problem is to define the proper goal. 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. How We Can Help You | Who We Are Then the cost of caring for a condition can be compared with the outcomes achieved. In an IPU, a dedicated team made up of both clinical and nonclinical personnel provides the full care cycle for the patient’s condition. The impact on value has been striking. Instead, “quality measurement” has gravitated to the most easily measured and least controversial indicators. Concentrating volume is among the most difficult steps for many organizations, because it can threaten both prestige and physician turf. 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. Existing systems are also 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 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 platform. 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 … With the tools to manage and reduce costs, providers will be able to maintain economic viability even as reimbursements plateau and eventually decline. Efforts to reform health care have been hobbled by lack of clarity about the goal, or even by the pursuit of the wrong goal. Yet the benefits of concentration can be game-changing. The net result is a substantial increase in the number of patients an excellent IPU can serve. Outcomes should be measured by medical condition (such as diabetes), not by specialty (podiatry) or intervention (eye examination). 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. 10) The providers on the team meet formally and informally on a regular basis to discuss patients, processes, and results. Clinicians must prioritize patients’ needs and patient value over the desire to maintain their traditional autonomy and practice patterns. We call it the “value agenda.” It will require restructuring how health care delivery is organized, measured, and reimbursed. These were called hyper-acute stroke units, or HASUs. “The Strategy that Will Fix Health Care,” Harvard Business Review, October 2013; All are already being implemented to varying degrees in organizations ranging from leading academic medical centers to community safety-net hospitals. 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 are also starting to be incorporated in real time into the process of care, allowing providers to track progress as they interact with patients. The strategic agenda for moving to a high-value health care delivery system has six components. In health care, the days of business as usual are over. Few health care organizations yet measure how their diabetic patients fare on all the outcomes that matter. The components of the strategic agenda are not theoretical or radical. 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. Instead, most hospital cost-accounting systems are department-based, not patient-based, and designed for billing of transactions reimbursed under fee-for-service contracts. 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. 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. The result has been striking improvements in outcomes and efficiency, and growth in market share. 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? In 2006, Michael Porter and Elizabeth Teisberg introduced the value agenda in their book Redefining Health Care. Corpus ID: 167036960. 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 While rarely used in health care to date, it is beginning to spread. It is a journey that providers embark on, starting with the adoption of the goal of value, a culture of patients first, and the expectation of constant, measurable improvement. 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. 11) Joint accountability is accepted for outcomes and costs. 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. 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. All stakeholders in health care have essential roles to play. Relocating such services cut costs and freed up operating rooms and staff at the teaching hospital for more-complex procedures. Physician income has remained static over the past decade, and physicians know that simply working harder, faster, or longer can’t compensate for their steadily increasing expenses. Also, retail clinics and other adjuncts to primary care practices are not equipped to provide holistic and continuous care for healthy patients or acute and preventive care for patients with complex, chronic, or acute conditions. Failure to improve value means, well, failure. 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. Duplication of effort, delays, and inefficiency is almost inevitable. These developments are not unique to the United States: A similar story is playing out in virtually every national health care system across the globe. Rising health care expenses have created enormous amounts of pressure in the health care system. E. Porter and Thomas H. Lee. 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. If they can improve the efficiency of providing excellent care, they will enter any contracting discussion from a position of strength. Data are aggregated around patients, not departments, units, or locations. Where TDABC is being applied, it is helping providers find numerous ways to substantially reduce costs without negatively affecting outcomes (and sometimes even improving them). At the core of the value transformation is changing the way clinicians are organized to deliver care. As IPUs’ outcomes improve, so will their reputations and, therefore, their patient volumes. Achieve best outcomes at the lowest cost. 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. Numerous studies confirm that volume in a particular medical condition matters for value. IPUs emerged initially in the care for particular medical conditions, such as breast cancer and joint replacement. What we’re reading: “In health care, the days of business as usual are over. 8) A physician team captain or a clinical care manager (or both) oversees each patient’s care process. 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. Satellites deliver less complicated care, with complex cases referred to the hub. International Consortium for Health Outcomes Measurement. 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). Providers benefit from improving efficiency while maintaining or improving outcomes. Also, consumer shopping can have only limited impact in a fragmented system where information about outcomes and price is lacking. Every organization has room for improvement in value for patients—and always will. Global capitation, a single payment to cover all of a patient’s needs, rewards providers for spending less but not specifically for improving outcomes or value. Children’s Hospital of Philadelphia, for instance, decided to stop performing routine tympanostomies (placing tubes into children’s eardrums to reduce fluid collection and risk of infection) at its main facility and shifted those services to suburban ambulatory surgery facilities. In health care, the overarching goal for providers, as well as for every other stakeholder, must be improving value for patients, where value is defined as the health outcomes achieved that matter to patients relative to the cost of achieving those outcomes. Outcomes should cover the full cycle of care for the condition, and track the patient’s health status after care is completed. The journey requires strong leadership as well as a commitment to roll out all six value agenda components. The Strategy That Will Fix Health Care Thomas H. Lee, MD Chief Medical Officer, Press Ganey October 2, 2014 . It’s time for a fundamentally new strategy. Some organizations are still at the stage of pilots and initiatives in individual practice areas. And it should make it easy to survey patients about certain types of information relevant to their care, such as their functional status and their pain levels. 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. Rather, it eliminated the chaos by creating a new system in which caregivers work together in an integrated way. 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. For the most part, the solutions have focused on the levers that particular stakeholders can push and have been designed to preserve existing roles. The Strategy That Will Fix Health Care – Harvard Business Review . 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. The first principle in structuring any organization or business is to organize around the customer and the need. This model is becoming more common among leading cancer centers. Geographic expansion takes two principle forms. And so on. 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. 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. 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. 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. The history of health care reform has featured a succession of narrow “solutions,” many imposed on provider organizations by external stakeholders and introduced with great fanfare. For example, Virginia Mason found that it costs $4 per minute for an orthopedic surgeon or other procedural specialist to perform a service, $2 for a general internist, and $1 or less for a nurse practitioner or physical therapist. For example, Vanderbilt has encouraged affiliates to grow noncomplex obstetrics services that once might have taken place at the academic medical center, while affiliates have joint ventured with Vanderbilt in providing care for some complex conditions in their territories. Management estimated the total cost reduction resulting from the shift at 30% to 40%. It also decouples payment from what providers can directly control. Contrast that with the approach taken by the IPU at Virginia Mason Medical Center, in Seattle. Hybrid models include the approach taken by MD Anderson in its regional satellite program, which leases outpatient facilities located on community hospital campuses and utilizes those hospitals’ operating rooms and other inpatient and ancillary services as needed. It’s time for a fundamentally new strategy. The strategic agenda for moving to a high-value health care delivery system has six components. For example, although many institutions have “back pain centers,” few can tell you about their patients’ outcomes (such as their time to return to work) or the actual resources used in treating those patients over the full care cycle. In primary care, IPUs are multidisciplinary teams organized to serve groups of patients with similar primary and preventive care needs—for example, patients with complex chronic conditions such as diabetes, or disabled elderly patients. The second emerging geographic expansion model is clinical affiliation, in which an IPU partners with community providers or other local organizations, using their facilities rather than adding capacity. 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} } 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. For example, the Stockholm County Council initiated such a program in 2009 for all total hip and knee replacements for relatively healthy patients. Geographic expansion should focus on improving value, not just increasing volume. 6) The unit has a single administrative and scheduling structure. Organize into Integrated Practice Units (IPUs) At the core of the value transformation is changing … Despite noble mission statements, the real work of improving value is left undone. When outcomes measurement is done, it rarely goes beyond tracking a few areas, such as mortality and safety. 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. 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. 2) Care is delivered by a dedicated, multidisciplinary team of clinicians who devote a significant portion of their time to the medical condition. (See the sidebar “Next Steps: Other Stakeholder Roles.”) Yet providers must take center stage. 3) Providers see themselves as part of a common organizational unit. Better care has actually lowered costs, a point we will return to later. Just as railroads converged on standard track widths and the telecommunications industry on standards to allow data exchange, health care providers globally should consistently measure outcomes by condition to enable universal comparison and stimulate rapid improvement. (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. The question is, which organizations will lead the way and how quickly can others follow? 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. The Cleveland Clinic is one such pioneer, first publishing its mortality data on cardiac surgery and subsequently mandating outcomes measurement across the entire organization. Patient-centered system organized around patient need. In this environment, providers need a strategy that transcends traditional cost reduction and responds to new payment models. (See the exhibit “Outcomes Measurement and Reporting Drive Improvement.”). Historically, health care IT systems have been siloed by department, location, type of service, and type of data (for instance, images). 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 … They are interdependent and mutually reinforcing; as we will see, progress will be easiest and fastest if they are advanced together. Tier 1 involves the health status achieved. 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. Payment is tied to overall care for a patient with a particular medical condition, aligning payment with what the team can control. That often means driving past the closest hospitals. Information technology is a powerful tool for enabling value-based care. “How to Solve the Cost Crisis in Health Care,”, Loss of mobility due to inadequate rehabilitation, Stiff knee due to unrecognized complications. But the opportunity to substantially enhance value in primary care is far broader. (For more, see Robert Kaplan and Michael Porter’s article “How to Solve the Cost Crisis in Health Care,” HBR September 2011.). 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. The six components of the value agenda are distinct but mutually reinforcing. Guidelines cover only a small slice of the overall care cycle and fail to reflect many individual patient circumstances. They meet frequently, formally and informally, and review data on their own performance. 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. 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. Medicine is changing — and so must doctors. 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%. Providers are improving their understanding of what outcomes to measure and how to collect, analyze, and report outcomes data. The third component of system integration is delivering particular services at the locations at which value is highest. Providers that cling to today’s broken system will become dinosaurs. These components include: Organizing into integrated practice units; Measuring outcomes and costs for every patient; Move to bundled payments for care cycles; Integrate care delivery across separate facilities This year, Walmart introduced a program in which it encourages employees who need cardiac, spine, and selected other surgery to obtain care at one of just six providers nationally, all of which have high volume and track records of excellent outcomes: the Cleveland Clinic, Geisinger, the Mayo Clinic, Mercy Hospital (in Springfield, Missouri), Scott & White, and Virginia Mason. Provided by multisite health care have essential roles to play sustain or grow their share. About the lack of alignment of a patient 3 outcomes improve, costs invariably go down volume and to! 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