LITERATURE REVIEW: Redefining Health Care: Creating Value-Based Competition on Results



By Michael E. Porter and Elizabeth Olmsted Teisberg

506 pp. Boston,

Harvard Business School Press, 2006

The US healthcare system is tremendously complex in magnitude  with delivery models fraught with high costs and variable outcomes.  Under the current  system of incentives, costs continue to escalate due to variation in care, and fragmentation of services. Many patients living with complex conditions are faced with  an immensely intricate system and, at the end of the day, unmet needs.

With incredible knowledge of business strategy and competition, the authors have studied health care models and systems in the US and in other countries. In Redefining Health Care, they provide a detailed assessment of the misalignment of incentives and the ill placement  of competition. Central to ills of the current model of US healthcare are  reimbursement models based on fee-for-service, with medical culture designed to provide “more”  services instead of focus on “value”.  The orientation to shift costs to other stakeholders instead of true coordination and share-decision making results in higher costs and low value.  Without a major shift in how health care systems are designed (or re-designed), with integration and focus on delivery of quality and effectiveness (i.e. getting more of the healthcare dollars spent), the authors argue credibly that the system will become unsustainable. At risk is the quality of care for all Americans.

This is one of the most important readings that has shaped my thinking about healthcare.  I find the multiple specific examples in a variety of healthcare settings (in the US and abroad) and operational creativity illustrated in this book highly useful.  The recurring emphasis on value creation with functional outcomes and quality of life metrics, is more recognized and incorporated into other outcome metrics by specialties outside of the rehabilitation specialties.

Some of the encouraging signs from the implementation of the Affordable Care Act have resulted in increased number of covered lives and decreased spending on healthcare.

Although published nearly a decade ago, the thoughtful critique and guidance for transformative change to move health care toward a healthy model of competition is crucial and relevant. Some of the most important remedies described in this book are incorporated into Accountable Care Organizations and Patient-Centered Medical Home models.  This important publication is immensely worthy of study and discussion by all healthcare participants.

About the reviewer

Dr. Benton Giap is health care executive with over 15 years of experience in clinical care and physician leadership with various organizations, including The Permanente Medical Group (TPMG) and Spaulding/Massachusetts General Physician Group (MGPO).  He was a former Chair of the Department of Physical Medicine and Rehabilitation at Santa Clara Valley Medical Center in San Jose, CA. He is currently a Medical Director for Anthem Blue Cross Commercial line of business. He is a member of AAPMR Work Group for Innovative Payment and Practice Models (IPPM) with the purpose of identifying and promoting innovative payment and practice models for the specialty of PM&R.

Dr. Giap completed his medical education at the University of Texas, and he trained in Houston at Baylor College of Medicine/The Institute for Rehabilitation and Research. He completed a Brain Injury Fellowship at Wayne State University/Rehabilitation Institute of Michigan and a Master in Business Administration at UCLA/Anderson School of Management.