Want health reform? Change these 6 things all at once

September 30, 2013
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The most interesting thing I read recently about health care was a Harvard Business Review article by economist Michael Porter and Thomas Lee, the chief medical officer at South Bend-based health information firm Press Ganey Inc.

The article, titled “The Strategy That Will Fix Health Care”, calls for the U.S. and foreign health care systems to embrace a “value agenda.” That is to say, an agenda that seeks to achieve the best outcomes for patients at the lowest cost.

Of course. Who’s against good outcomes at low cost?

The entire U.S. health care system, that’s who.

“While health care organizations have never been against improving outcomes, their central focus has been on growing [patient] volumes and maintaining [profit] margins,” Porter and Lee write. “Despite noble mission statements, the real work of improving value is left undone.”

There have been many efforts to change this focus on volumes and profits, but Porter and Lee run down how all of them have failed because they usually try to change only one of about seven interlocking pieces of the health care system.

Those seven pieces are: 1) independent physicians organized by specialty, not patient needs; 2) quality measurements based on process compliance, not patient outcomes; 3) accounting for costs based on fictitious charges, not actual costs; 4) fee-for-service payments with myriad cross-subsidies between lucrative procedures/patients and money-losing ones; 5) a fragmented industry of health care systems and rampant duplication of services and facilities; 6) fragmented patient populations that prevent providers from specializing in certain diseases; computer systems siloed by medical specialty or function.

The net result is that the United States spends twice as much per person on health care than the next most spendthrift nation, and sports poorer overall health to boot.

So Porter and Lee call for simultaneous action on no less than six fronts.

1. Organize health care providers into integrated units focused on specific patient needs: For example, Porter and Lee suggest teams of clinicians that focus on diabetes, as well as the kidney and eye disorders that advanced diabetics develop. Another example is a team of cancer specialists that team up with palliative care providers to treat patients with metastatic cancer. These teams would also provide education and counseling to patients and their families to encourage adherence to treatment regimens and promote needed changes in behavior, diet and exercise habits. These teams would have a single system for scheduling and administration.

2. Measure outcomes and costs for every patient: These integrated health care teams must move beyond the rudimentary quality metrics now used, which primarily measure quality based on whether certain processes were correctly followed. Instead, these integrated would use or in many cases develop metrics for actual patient health as well as actual costs to patients (and their health plans).

3. Move to bundled payments for care cycles: Hospitals and doctors are now, in most cases, paid a separate fee for each thing they do to a patient. Porter and Lee want to implement a system that would pay each team of clinicians one fee to care for each patient. For an acute care patient, such as a patient who comes to a hospital for surgery, the bundled payment would cover all care needed to prepare, cut and convalesce the patient. For patients with chronic diseases, a bundled payment would cover all necessary care for a year (or some other length of time). For primary care, there would be bundled payments for different types of patients: healthy children, healthy seniors, etc.

4. Integrate health systems: Porter and Lee don’t mean just bring more hospitals and doctors under a common name, as nearly all Indianapolis-area hospital systems have been doing. Rather, they want all health systems to do these four things: 1) reduce or eliminate services in which a health system can’t produce high value for patients; 2) concentrate remaining services in fewer locations; 3) steer patients to the lowest-cost location for a service (home care first, then outpatient clinic and, only when needed, a hospital facility); and 4) create administrative systems to allow patients to move from one location to another without glitches.

5. Expand geographic reach: Simply put, health care providers that achieve region- or nation-leading value in certain medical conditions need to expand regionally or nationally to provide that service to more patients. Today, even most academic medical institutions, such as Indiana University Health, derive the overwhelming number of their patients from their immediate local area.

6. Build an enabling information technology platform: IT up until very recently has been about automating existing work functions. But, as Porter and Lee point out, “automating broken service-delivery processes only gets you more-efficient broken processes.” They call for new kinds of IT systems that are organized around patients and all data related to them, that make that information easily available to all members of the integrated team, use common data definitions across all medical specialties, and which allow easy extraction of information for generating reports on outcomes and costs.

That’s a tall order. Perhaps an impossible one, although Porter and Lee cite existing health systems that are implementing some of their six-part strategies already—and achieving good results.

Porter and Lee believe that the health systems that embrace the value agenda most aggressively will be the winners financially--even before the rules from government agencies and private health insurers fully change to pay them for value.

“As should by now be clear, organizations that progress rapidly in adopting the value agenda will reap huge benefits, even if regulatory change is slow,” they write. “As [integrated health care providers’] outcomes improve, so will their reputations and, therefore, their patient volumes. With the tools to manage and reduce costs, providers will be able to maintain economic viability even as reimbursements plateau and eventually decline.”

Check back in about five or 10 years to see if they’re right.

  • Efficient
    Health care went aria when capitalists found out it could be very lucrative to control the logistics. Doctors and nurses use to get into the health care profession because they had compassion for people. Now they are controlled by capitalism. So, with that being said, all organizations have an opportunity, at this moment in time, to adopt the inevitable practices of this article. Two things come to mind. One, if a company doesn't adopt these principle, they will be pushed out. Two, this gives our government and opportunity to plan for the future costs to cover health care for all citizens. Future costs can actually be predicted within a reasonable range. Money can now be set aside to cover future costs.
    • Superb article
      This really hits the bullseye. Nice article JK. Its all true. This, as the current panic to kill the threat to the money machine should indicate, will be seen as a very Swiftian proposal. The biggest problem- does anyone who would benefit from this system understand it? The money machine does, thats why they wont ever submit to it- they will need to be made to do it. But who will make them. For there to be a public outcry and support- it must be understood; a need, needs to be felt. The average American doesnt even understand their own diseases, much less how they gets fixed, and how it gets paid for, and who makes what from that process. After the Time article this spring we heard the roar of..........crickets, and every hospital CEO shaking under his/her desk. My complements to you for taking a first shot at overcoming just that. The light of day is always best. Thx.
    • No to focused factories
      Most of the ideas in this array did not originate with Porter and are actually being implemented today: outcome measurement, bundled payments (and the even more powerful tool of global patient budgets), clinical integration and the development of IT organizations that can move clinical data to where the patient is (see your past articles on IHIE). However, the central Porter idea that medicine should be organized around different illnesses (diabetes, heart failure, etc.) doesn’t make sense to me. There are so many more illnesses than medical specialties that it would be nearly impossible to have standing interdisciplinary “units” devoted to a single illness. And in the real world, patients often do not have just one illness, so in the Porter world, a patient would have to be treated by many of these illness-focused units – creating a new set of communication challenges. Better to have the interdisciplinary team form around the needs of individual patients, supported by health information technology and supported by care managers and baseline “lean” protocols (“mass customization” in the terminology of Dr. Brent James of Intermountain Health).
    • Good Ideas Need Support
      The article contains good ideas. Some of them are already partially incorporated into the Affordable Care Act. Too bad the Republicans cannot get behind improving health care using the ACA as a vehicle. After all, the ACA was incubated by the Heritage Foundation and initially implemented by a Republican governor. I introduce politics into this discussion because most of the vested interests in the current health care system have no incentive to embrace the ideas in the article.
    • None is so ignorant...
      Your comments are inane. Healthcare, in order to be cost-effective, MUST be run like a business, not like a Pollyanna-ish Valhalla where nurses where big hats and no one fails to recover. The #1 problem in healthcare in the U.S. today is the failure of all providers to conduct their practices/institutions precisely in the fashion in which you lament being their biggest failure. Despite what Obama would like you to believe, nothing is free and the 'government' has no money. Every good or service costs money, profit is not evil and the government merely collects and redistributes tax dollars collected from those who earn money!
      • Huh?
        Totally incomprehensible

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