Rethinking Value-Based Health Care Delivery

One of the highlights from the American Psychiatric Association's annual meeting in Philadelphia, PA, earlier this week was a presentation entitled Value-Based Health Care Delivery by Michael Porter, MBA, PhD, Harvard Business School, Institute for Strategy and Competitiveness.

One of the highlights from the American Psychiatric Association’s annual meeting in Philadelphia, PA, earlier this week was a presentation entitled “Value-Based Health Care Delivery” by Michael Porter, MBA, PhD, Harvard Business School, Institute for Strategy and Competitiveness.

Porter, a Bishop William Lawrence University Professor at Harvard Business School (Harvard's most distinguished professorial post), is the author of Redefining Health Care. In his book, Porter develops a new framework for transforming the value delivered by the US health care system. In his presentation on Tuesday, he spoke more about this framework and provided several examples of organizations that are currently incorporating parts of it in a cost-effective manner.

Porter began the presentation by telling the audience that coverage is not the goal of heath care; rather, that the goal is to deliver excellent value to the patient. This is because value is the only goal that can unite the interest of all health care system participants. With that in mind, it’s necessary for our nation as a whole to design a health care system that dramatically improves patient value and is dynamic enough to continue rapidly growing. According to Porter, there are 6 fundamental steps to achieve this. They are as follows:

1 - organize care into integrated practice units (IPUs) around patient medical conditions --> organize primary and preventive care to serve distinct patient segments

2 - measure outcomes and cost for every patient

3 - reimburse through bundled prices for health care cycles

4 - integrate health care delivery across facilities in health systems

5 - expand areas of excellence across geography

6 - build an enabling information technology program

If an organization succeeds in accomplishing steps 1-3, they have the foundation for drastically improving the current system. However, even if an organization is only able to accomplish steps 1 and 2, they will see a tremendous positive impact in terms of patient care and long-term cost savings.

IPUs have already been set up in other countries; to illustrate the effectiveness Porter pointed to the West German Headache Center in Germany. This organization has streamlined the care of migraine patients by providing patients with a location that has all the specialists that would be involved in the care of a migraine patient. Currently, the US relies on a disjointed model in which the patient is akin to a “ping pong ball.” The patient might begin with their primary care provider before being referred to an outpatient neurologist or outpatient psychologist. It is also possible that these patients end up at an outpatient physical therapist or imaging center. Not only is this a lengthy process for a patient that is seeking timely care, but it is also extremely expensive when considering that each individual organization will require separate paperwork. The administrative costs alone put a tremendous strain on the health care system.

Now consider the West German Headache Center model. A migraine patient shows up to the center and is evaluated by neurologists, psychologists, physical therapists, etc. Depending on the evaluation, they are then referred to one of the following: a primary care physician, hospital inpatient unit, affiliated imaging unit, or affiliated “network” neurologists. So, rather than having multiple examinations over a period of time, the patient can be evaluated and, if necessary, referred to the proper sector immediately. Since all parties are affiliated, the medical records are handled much more easily and the value to the patient is drastically improved.

The one caveat with the IPU model is that cost will increase initially. The cost associated with going to a center like the West German Headache Center would be more than a typical copay or inpatient visit to a primary care provider or specialist. However, because of the streamlined service and improved outcomes, the cost of care decreases approximately 25% after 18 months, according to Porter’s research, which takes into consideration long-term outcomes.

Perhaps the most challenging part of maintaining a model like this is the effort that must be made in order to track and measure outcomes. Currently, the US health care system does not accurately consider all variables in the outcome of patients. More often than not it is the processes that are measured, not the outcomes. Porter mentioned that this is partially because it is so difficult to measure the patient outcomes and partially because “it’s easy to get an ‘A’ on this test” and that “physicians like getting ‘A’s’ on tests.”

Because of time limitation, Porter did not branch out into processes for tracking patient outcomes; however, he did encourage attendees to refer to his Outcome Measures Hierarchy document published in the 2010 New England Journal of Medicine.

To review Porter’s presentation, please visit Harvard’s Institute for Strategy and Competitiveness website.

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