The Value-Based Health Proposition

I dare say I have worked off my fundamental formula on you that the chief end of many is to frame general propositions and that no general proposition is worth a damn.

Oliver Wendell Holmes, Jr. 1841-1935

Competition on results to improve patient value is an irresistible force for transforming the health care system without the need for top-down government intervention. Value-based competition provides a new conception of the health-care system, while integrating many threads in the reform discussion. More important, it leads to concrete and actionable strategic, organizational, operational, and policy implications for all system participant, including government.

Michael E, Porter, Elizabeth Teisberg, Redefining Health Care: Creating Value-Based Competition on Results,  Harvard Business School Press, 2006

It sounds almost too good to be true: if everybody engaged in the health system competes on the basis of providing  concrete, measurable “value” for patients, all will be well.  

The value-based proposition goes like this.

·         Health plans and physicians will compete on value and will re-enforce and magnify each other by focusing on providing “value” for patients.

·         Prevention by primary care physicians will become more important than intervention by specialists.

·         Health and wellness rather than disease and sickness will be stressed.  

·         Pay for hospitals and doctors will be based on concrete measurements  of improved outcomes related to total health, rather than on piece-meal treatments along the path from birth to death.

·         Care delivery will be restructured to provide team-based, integrated care over the full cycle of care from prevention, to disease onset, to disease management, to palliative care.

I keep running across statements that physicians will be paid on the basis of value rather than the volume of patients seen,  that reform will be center on health rather than disease, and that fee-for-service will become passé  because it offers perverse incentives.

How to get from here to there has puzzled me.  I understand that integrated systems of care with salaried physician is one path to there,  that paying physicians for value results might help get us there,  but somehow the other details – what roles hospitals, health plans, and consumers play in the great scheme of things has always eluded me.

That’s the main reason I sat down with Michael E. Porter’s and Elizabeth Teisberg’s book,  Redefining Health Care (Harvard Business School Press,  506 pages, 2006) which preceded ObamaCare by 4 years and set the stage for many of its provisions, such as Accountable Care Organizations offering bundled payments to Medicare outcomes,  to see if I could figure out what value-based care, indeed, “value” was all about 

Perhaps I should begin with the book’s premise: that  health care competition has failed  because it is based on the proposition of zero-based competition, where one player in the system fails at the expense of the other. 

Here are the basic ingredients of value-based reform as set forth in the book.

·        The only way to truly reform health care is to reform the nature of competition to reward    value for patients – health outcome per dollar of cost expended.

·         Mandatory measurement and reporting of results is perhaps the single most important step in reforming the health system.

·          Physicians and health systems competing on results and making these results public throughout the system will dramatically improve quality and efficiency.

·         Primary care and preventive care will be extended to all Americans,  care will become affordable,  substandard care , including that delivered to the poor and minorities, will end.

How will these be done?   By adhering to the principles of value-based competition. These are:

·         The focus will be on delivering value to patients, not just lowering costs.

·         Competition will be based on results.

·         Competition will center on medical conditions over the full-cycle of care.

·         High-quality care will be less costly.

·         Value will be driven by provider experience, scale, and learning at the medical condition level.

·         Competition will be regional and national, not just local.

·         Results information to support value-based competition must be widely available.

·         Innovations that increase value must be strongly rewarded.

The author say value-based care adhering to these principles is already under way at large integrated organizations such the Veteran Administration Hospitals, Intermountain Health Care, Kaiser Permanente,   Cleveland Clinic, and Mayo Clinic.

Where are we on this road of organizational Utopia?  Not very far,  I fear,  for we have not yet decided what results define “value,” what defines “value” for patients and their caregivers,  and whether data-based objectivity can ever replace decision and feeling -based subjectivity.   

Still it is hard to argue with the authors’ statement in their conclusion: “Measuring results , and making results information widely available, is probably the single most important catalyst to triggering cascading changes in the system.” 

Americans are a results-oriented people.  So far, nearly  four years into ObamaCare,  they do not like what they see in government-driven reform and they will surely be open to a rationale alternative.

Tweet:  Value-based care, resting on  hard data and rewards for improved outcomes,  may be the next health reform wave.