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Is value a fact-free zone in health care? Michael Porter challenges health systems to redefine the value agenda


Value. It’s supposed to be the savior of U.S. health care, a fragmented and opaque delivery system where prices are completely divorced from costs, quality or customer satisfaction. 

But as it often happens with buzzwords, “value” has become so ubiquitous and laden with importance that it’s nearly devoid of meaning. It’s unmeasured and misunderstood.

In health care, ‘value’ is “truly a fact-free zone,” said Harvard Business School Professor Michael Porter, Ph.D., Monday in his opening address at the US News & World Report’s Hospital of Tomorrow conference in Washington DC. “Before they can improve on value, health organizations need to do get clear on what they mean by value.”

Porter argues value should always be defined around the customer, or patients’ needs – a measure of outcomes achieved per dollar spent. But if that sounds simple, it’s far from easy.

Outcomes aren’t the same as outputs, said Porter, reflecting on a conversation he had with a physician who received an award for controlling the blood sugar levels of her diabetic patients. “She was wondering whether she should accept the award because, though she had done a good job, her facility had the highest amputation rate among leading hospitals,” Porter said. “HbA1c control is a good indicator that you’re on the right track, but you have to hold yourselves accountable to the actual outcomes, the actual results of care.”

Further complicating matters: outcomes are multi-dimensional, hierarchical and patient-specific. No single outcome encapsulates the value of care, said Porter. “Value is ultimately the outcomes we can achieve for dealing with a patient’s medical condition, whether it’s breast cancer or COPD, over the full cycle of care for that condition.”

This poses a measurement and health IT challenge. Focus solely upon the five-year survival rate for men treated for prostate cancer, for example, and you might miss variation in other key outcomes, such as erectile dysfunction and incontinence.

It’s ultimately also an organizational and leadership challenge, Porter said. “We need to move away from organizing around specialties, departments and lines of service to organizing around the patient’s problems. This is a substantial organizational transformation.”

For specialty care this means organizing around episodes of care, and for primary care, it means organizing around groups of patients with similar needs. “Primary care for frail, elderly people is completely different than primary care for a child or healthy adult,” Porter said.

On top of the organizational problem, there’s the vexing issue of getting a handle on costs. Not many health institutions can do it with specificity or in a way that’s tied to the patient. That’s the next step to measuring value, following by payment reform – moving from payment methods that reward volume to those that reward value, or keeping patients healthy and out of the hospital, Porter said. “We believe there is only one way of getting paid that actually aligns with the value of the patient, and that’s bundled reimbursement.”

Health systems can’t abandon volume entirely. “Volume in a medical condition enables value,” said Porter, referring to the economies of scale and quality achieved by focusing on doing one thing well, over and over again. “We need to start aggregating volume in fewer locations,” he said.

Expect more integration and collaboration, even consolidation of health systems, Porter agues. “Right now health systems are loosely confederated groups of stand-alone units that largely do their own thing.”

And expect health systems to expand their geographic footprints. “We’ve been a very localized industry and that has prevented us from having enough volume and reach to deliver enough value,” Porter said.

Taken together, all these pieces of the value puzzle are reinforcing. The question is where to start first?

Porter recommends that measurement be an early focus. “Measurement is very very powerful. If you don’t have a fact-free zone, you know what it really costs and you know what your outcomes really are, it gets a lot easier to agree,” he said. “We see marvelous things happening where you get the data in place. ...It’s doable and the improvements are real and substantial.”

By: Kirsten Stewart

Kirsten Stewart is a senior writer for University of Utah Health Sciences