By Elizabeth Teisberg, PhD and Scott Wallace, JD, MBA
Value, achieving improved health outcomes for the money spent, is the goal of health care.1 When Redefining Health Care published in 2006, critics worried that value was a utopian goal and better outcomes would always require higher spending.2 While the goal of higher value is now widely accepted, a persistent question arises: “Value for whom?” The unequivocal answer is value for patients.
Patients are the reason that clinicians practice and that hospitals and health plans provide services.3 The existential purpose of health care is to serve patients, improving their quality of life and dignity of death. Health care achieves this by helping patients retain or regain capabilities and freedom from pain. Improving meaningful outcomes for patients is the calling of clinical practice. Better outcomes for patients also increase the value of health care, aligning value with professionalism.
Everyone agrees that U.S. health care spending is too high. There are many ways to reduce it. The value perspective identifies organizational innovations that drive better outcomes for patients in ways that reduce costs. Increasing value is surely preferable to increasing limitations on care or access.
The Right Kind of Competition for Care Delivery Innovation
Innovation in most sectors of the economy drives remarkable improvements. Consider changes in phone service over the past 15 years. Cameras, airplane boarding passes, apps, web service, credit cards and a flashlight are all innovations. Imagine health care delivery with that pace of innovation, adoption and diffusion of new technology and services.
The talent and passion of clinicians, and the importance of their mission, should trigger dramatic innovation that increases value for patients and families.
But it hasn’t, as evidenced by persistently poor national health outcomes, errors, disparities, unwarranted variation, waste, limited access, and rising spending. Instead of innovation, competition in health care delivery services focused on increasing the volume of services provided while battling over who bears the costs. The question of “value to whom” is a vestige of that cost-shifting mindset – a focus on dividing value rather than creating it.
Increasing value for patients unifies the goal by recognizing both the purpose of care and the reality of cost. This aligns interests. Patients benefit from better health outcomes, clinicians pursue their professional calling and provider organizations fulfill their service mission. Payers seek more efficient ways of achieving good outcomes and society efficiently realizes the wellbeing and productivity of good health.
Competition to create more value for patients fuels a positive innovation dynamic. The biggest value increases occur when health outcomes improve in ways that reduce the costs of care. For example, a stroke patient who does not become paraplegic has lower long-term care costs because of the better outcome. Frail, elderly patients whose tailored care allows them to live safely at home can avoid the higher costs of nursing homes. Because living in good health is inherently less expensive than living in poor health, there are myriad ways that better outcomes also lead to lower costs. A patient with diabetes whose condition does not progress to kidney failure or amputation will have lower costs due to good outcomes. Early diagnosis of colon cancer allows effective treatment that is less invasive and less expensive. Flu can be accurately diagnosed on a video call, enabling convenience, faster treatment and recovery without exposing others.
Transformation of Goals from Volume to Value
Traditionally, value was not health care’s goal. U.S. health care was assumed to be very good, but too expensive. From that perspective, policy aimed to reduce spending, hopefully without sacrificing quality. Simultaneously, clinicians were held morally responsible for doing as much as possible for every person in their care. Payers pressured providers for lower prices per treatment, but spending rose because the volume of services grew. In the volume based system, “good” physicians were identified by effort –actions taken and hours worked, not results. Leaders were not focused on how to improve outcomes in ways that reduce costs.
The transformation to a value mindset begins with the simple observation that patients and families seek health, not more treatment. No one seeks an extra, unnecessary colonoscopy. The purpose of health care is to improve health – cure disease, repair injury, preserve capability, and to enhance wellbeing throughout life. Treatment is an intermediate good, a means to better health. Patients would prefer health without invasive tests and recovery without hospitalizations, surgery or the side effects of medications. They endure treatment in pursuit of regained capabilities, comfort and calm.4
Measuring Outcomes that Matter to Patients
The results that determine value are the outcomes that matter to patients in the medical circumstances they face, and the total costs of achieving them. These results need to be measured at the level where value is created for patients – in helping a person who is receiving care for a specific set of health circumstances. At the level at which value is created, patients can readily identify the outcomes that matter. For patients with a particular condition, a handful of functional outcomes describe significant differences in their quality of life – during the care experience and after completion. Patients with head and neck cancer are concerned with survival and with retaining the abilities to swallow, eat and talk. Patients with asthma want to breathe comfortably, avoid emergencies and be able to exercise. Patients with diabetes are often concerned about being able to walk or dance, to see and to make love. Measuring a relatively small set of functional outcomes, not hundreds of processes, allow teams to accelerate improvement of those results and support professional excellence. Because patients care about multiple aspects of their results, value is multidimensional. Patients with advancing prostate cancer are concerned about survival, continence, potency and depression. The dimensions are usually non-commensurate. The outcomes can be displayed on a diagram, but can’t be added because each outcome might be measured on a different scale (e.g. years, dollars, amounts of pain). Even if the measures were commensurate, different individuals would weight them differently, so there is no one measure for aggregate quality of life outcomes. The multiple dimensions need to be kept distinct so that patients and clinicians can make good decisions and so clinical teams can clearly understand their progress on improving results for patients. Comparing outcomes for different conditions or circumstances often is not meaningful. The results of care for a broken leg can be compared to other care for a broken leg, but can’t be meaningfully compared to the value of delivery of a healthy breach baby or reversing the progression of diabetes. Making comparisons at levels too fragmented or too aggregated to describe how value is created for patients is also unhelpful. For example, quality measured across an entire hospital is too aggregated to be meaningful. A hospital may have exceptional results for breast cancer treatment but consistently below risk-adjusted expected results for kidney transplants. In this case, a single hospital quality score is not meaningful. Comparing fragments of the care cycle is also misleading. Patients and clinicians need outcomes for patients’ full continuum of care, not just for surgery or radiation or chemotherapy or rehabilitative care.
Measure for Improvement, not for Judging
With appropriate risk adjustment, the multidimensional results for patients can be compared across different types of care, different protocols, different clinicians or different clinical teams. By looking at results from many patients, physicians and teams can gain insight on whether their team’s patients fare better or worse than similar patients treated elsewhere or treated with different care processes. Facts are friendly. Sharing outcome data enables learning and improvement. For patients with cystic fibrosis, life expectancy has more than doubled since outcomes have been tracked and compared. If a physician’s patients were not achieving better than average life spans, that clinician could see that and learn from those whose patients had better outcomes over time.5 The inherent professional incentives of physicians and other clinicians are to improve outcomes for their patients; simply put, to be better doctors. Because they appeal to professionalism, data on meaningful outcomes provides stronger incentives than most financial bonuses. Measuring meaningful outcomes inspires learning. Every organ transplant in the U.S. is recorded in a registry maintained by the United Network for Organ Sharing (UNOS) and a surgeon or hospital cannot get another organ for transplantation unless outcomes for previous patients have been reported. UNOS reports results for every facility and sophisticated risk adjustment enables reporting of whether outcomes exceed or miss expected results. The percentage of kidney transplant patients with one-year graft survival has risen significantly and the variation among teams has shrunk as expertise increases and is shared. In 1989, about 80% of patients’ grafts survived the fist year and 10% of facilities had worse-than-expected results after risk adjustment. In 2013, 95% of patients’ grafts survived the first year and only 2.4% of facilities had below-expected results. The improvement by clinical teams benefits patients, whether or not patients use the data to chose a provider.6 Such comparisons also drive learning about what a person or team does especially well and where improvement is needed. For example, MD Anderson compares functional outcomes for head and neck cancer patients among surgeons. This analysis, combined with observations by nurses on the team, led to the realization that the precise location of a small number of stitches affected patients’ abilities to swallow and eat after surgery. Again, both patients and professionalism were well served
Learning from Positive Outcomes During Care
Outcome measurement can drive improvement during the care process. Clinical psychologists at the Cincinnati Children’s Hospital Medical Center used patient reported functional outcomes to assess the progress during care for their pediatric patients being treated for obsessive compulsive disorder.7 Treatment sessions typically lasted about an hour and the only available assessment tool required considerably longer to administer and score, so they developed a new approach. The primary determinants of success in OCD treatment are control, distress and functioning – essentially questions about whether the child could control the urges of the condition, was distressed by them and could function in everyday activities. The clinicians developed a single-page assessment form that each child was asked to complete before therapy sessions. Brightly colored with a ten point scale that indicates the disease in control in yellow and the patient in control in green, patients were asked to rate their level of mastery over the disease by indicating whether they could play with friends, play video or other individual games, manage the urges of the disease and complete homework tasks. Using surveys collected throughout a full cycle of care (typically 18-24 weeks), the team sorted patients into four groups based on whether there was no, slow, inconsistent or rapid improvement. Further analysis revealed that the patients with rapid improvement were treated using a specific technique of cognitive behavior therapy.8 The psychologists whose patients had achieved the best results worked with others on the staff to achieve consistent practice, and the results were stunning. Shortly after the changes in practice, 65% of patients achieved significant improvements in symptoms after only four sessions. The average number of sessions required for patients to become symptom free dropped to 12, and the rate at which patients dropped out of the program fell by more than half.
Organize Teams around Patient Needs and Medically-Defined Populations
As the CCHMC results demonstrate, a great team dynamic can drive learning, improvement and success. Most health care, however, is delivered by groups, not teams. Often, when a patient presents for care, a group is assembled as needed, depending largely on availability of personnel on-site or oncall. These groups rarely share a panel of patients, so even if some clinicians have worked together, they lack a shared learning process and tight relationships of a standing team.9 Most providers are organized for treating every patient, no matter how unusual the condition. As a result, they are inefficiently structured for the most common needs. Fracturing resources into parts and pieces enables the flexibility to construct a care group for any patient, but patient journeys through this system are inefficient, more error prone and less effective than they should be. Every person is individual, but this does not mean that his or her health care needs are entirely unique. Most people are part of medically-defined segments of the population: for example, they have spinal injury, coronary artery disease, are spry in spite of old age, or are frail with multiple chronic conditions. Even small hospitals have some segments of patients with relatively predictable medical circumstances — an expected number of breast cancer, heart failure or asthma cases. Organizing around medically-defined segments enables efficiency and accelerates team-based learning about improving care experiences and outcomes. Patients of The Joslin Diabetes Center in Boston see a multidisciplinary team of caregivers who share a panel of patients and meet regularly to discuss their care and insights about what works.10 Insights from the Joslin’s methodical learning and consistent processes have been collected and documented to create a franchised model of care. Most care delivery is organized around departments, services, procedures or facilities, rather than for specific patient groups and the integrated, full-cycle care they need. Health care’s well-documented unwarranted variations in care and outcomes11 could be dramatically reduced by more use of standing teams organized around common medical conditions. The starting place is asking what do patients with a particular set of circumstances usually need? For example, what services are usually needed by patients with traumatic brain injury? What services are needed by frail elderly patients who have multiple chronic conditions? The multidisciplinary team for a segment of patients needs to include the professionals from whom the patients typically receive care. Having the commonly needed services in the same hospital or health system isn’t enough. There needs to be an identified team for the segment of patients. Every clinician need not be full-time with this patient segment, but when a frail elderly patient needs a nephrologist, there should be someone who regularly works with the frail elderly team. If those identified team members are not in the same network or the same location, they still need a consistent, ongoing relationship to improve outcomes and reduce costs as a team. Many organizations start the process of creating teams by assembling some of the people who contribute to care in a particular pathway. The clinicians’ early tasks are to identify consistent and safe care pathways, improve patients’ experiences and results, and streamline processes to cut costs. The need to cut costs often provides the sense of urgency, but the more inspirational opportunity is to understand the potential to accelerate improvement in outcomes.
Teams Enable Payment Aligned with Medical Success
Provider organizations that have teams defined around patient segments are better prepared for new payment models. Team-based payment can improve alignment of medical and financial success. While some organizations pay teams for care bundles, it’s more common to achieve team-based payment through salaried physicians whose performance reviews depend on health outcomes, not just volume. Either way, payment alone does not create relationships and team dynamics, and because sharing bonuses or total reimbursement among colleagues is almost unimaginable without good working relationships, team-based care needs to be established well ahead of payment changes. Co-location of people is a good first step. While the impacts of prepayment for providers and clinicians remains unclear, capitation’s success will depend on how organizations manage the changes internally. Most organizations that are already paid via capitation still use fee-for-service payment models internally. This is risky misalignment that can undermine profitability. Prepayment doesn’t automatically improve value for patients. If the prepayment model guaranteed better health outcomes that drove down total spending, integrated provider-payer organizations would already have consistently better outcomes across many services. But tremendous variability persists. To achieve the cost and quality objectives of prepayment, high-value care delivery will need to become the norm. Pre-payment will reduce margins unless it is matched with value-based strategy. While creating high-performing teams is daunting, the task is easier when leaders celebrate the professional successes of the teams whose patients have measurable improvements in outcomes and costs. Teams that share the cause and purpose of improving their patients’ outcomes in measured ways will spur a cultural transformation.
Value-Based Strategy Change is hard. Transforming to value-based strategy entails dramatic change. But the status quo is untenable. Leaders have to anticipate the anxiety that change and uncertainty evoke. Individuals and groups will see many potential problems that reorganization may present. But the current organization of non-teams, or of teams not defined around value for patients and families, has bigger problems. The leadership challenge is to hold the old approach to the same standard of critique as the new approach. Recognition of the magnitude of current problems puts the opportunities of transformation in new light. The logic of value-based care acknowledges that health care exists to create value for patients. Measuring that value accelerates improvement, reduces unwarranted variation and disparities in care, and supports the efforts of caregivers. From the perspectives of patients and families, as well as the perspective of clinicians aspiring to excellence, measurement supports success. Understanding the patient and family perspective on their medical circumstances unlocks startling opportunities to create value. Starting from the patient perspective is relatively rare in health care, though this design-thinking approach is now common in most sectors of the economy. Ideas will need even deeper motivation than focus group results and analysis of patient satisfaction. Innovative care models will add services in today’s invisible gaps, coordinate care across boundaries that currently looked impermeable, and remove obstacles that patients face but the delivery system does not see. Value-based strategy supports the calling of medicine to improve patients’ health. The transformation from volume to value is not about administratively directed care and confusion. It is about caring teams improving what matters most to their patients.
About The Authors
Elizabeth Teisberg, PhD, is a Professor of Community and Family Medicine at Dartmouth’s Geisel School of Medicine in Hanover, New Hampshire. She is also a Senior Institute Associate at Harvard’s Institute for Strategy and Competitiveness. Her expertise is in Strategy and Innovation, particularly in health care delivery. Professor Teisberg wrote Redefining Health Care: Creating Value-Based Competition on Results with Professor Michael E. Porter. Since its publication, she has worked internationally to inspire and implement innovation for dramatic improvement in health care value.
Scott Wallace is a Visiting Professor of Family and Community Medicine at Geisel. His research focuses on employee health as a business strategy and on redefining chronic disease care and transforming health care from volume-based to value-based. He was the first CEO of the National Alliance for Health Information Technology. In 2004, President George W. Bush appointed him as the chairman of the Commission on Systemic Interoperability, an eleven person federal commission created to develop a national health care IT strategic plan, holds a juris doctorate from the University of Chicago Law School, a master’s degree with honors in business administration from the University of Chicago Graduate School of Business and a bachelor’s degree in economics from Duke University.
- Porter ME, Teisberg EO, Redefining Health Care, Boston MA, Harvard Business School Publishing 2006.
- Reinhardt UE, Porter and Teisberg’s Utopian Vision, Health Affairs Blog, October 10, 2006 (http://healthaffairs.org/blog/2006/10/10/health-reform-porter-and-teisbergs-utopianvision/).
- Organizations must capture a portion of the value they create, but this issue of allocating profits is a fundamentally different question than for whom should health care create value.
- Wallace and Teisberg, “Measuring What Matters: Connecting Excellence, Professionalism and Empathy,” in this special issue, discusses these outcomes during care.
- Seven outcome measures and individual facility data compared to the national average and the foundation’s national goal are available at: http://www.cff.org/LivingWithCF/CareCenterNetwork/ CareCenterData/ (no-charge registration is required to search data fields).
- The UNOS data are available at http://optn.transplant.hrsa.gov/converge/latestData/advancedData. asp
- Private communication with Rebecca Kniskern, PhD, Team Leader, Obsessive Compulsive Disorder Academic Collaborative Team, Behavioral Medicine and Clinical Psychology Department, Cincinnati Children’s Hospital Medical Center, Cincinnati, OH.
- Patients were pushed to confront the symptoms of the condition.
- Population health models, such as Accountable Care Organizations, often face huge challenges when a newly constructed alliance expects the group to achieve results that one might hope for from a practiced, integrated team.
- Porter ME, Teisberg EO, and WallaceS. The Joslin Diabetes Center, HBS no. 9-710-424, 2009, REV. January 25, 2010.
- Dartmouth Atlas of Health Care. http://www.dartmouthatlas.org/