Health care industry costs are quickly becoming too high for any one provider, payer, or especially, patient to maintain. It is suggested that more than $1 trillion is being squandered [within healthcare]. How did this problem come into play? Stakeholder expectations, changing reimbursement models, technology advancements, and clinical best practices are all evolving as a result of a confluence of health drivers. All these changes are leading to rising demand for healthcare. As Governor John Kasich recently articulated, “Finally, we can never truly fix the health care unless we start paying for value rather than volume.”[1] It is refreshing that Ohio is transitioning to paying physicians for providing better outcomes, and not simply more care, but what about the rest of our country?
In response to this new focus on fixing our broken health care system, leading healthcare delivery organizations (HDOs) are transforming operations to emphasize value-based outcomes through the entire healthcare delivery process and for all stakeholders. A few HDOs on the forefront have already created Value Management Offices (VMOs) to spearhead efforts on delivering value-based outcomes, while others on the lagging end are just beginning discussions for delivering value–based outcomes. Improving value requires either improving one or more outcomes without raising costs, or lowering costs without compromising outcomes, or both. Outcomes empower patients, providers, and payers and will influence the future healthcare delivery landscape in three distinct ways:
1. Patients shall choose the providers for their care based on outcome value scores
2. Providers shall be data-informed to make targeted improvements and learn
3. Payers shall measure return on investment and direct patients to high-value providers
Value Management is the discipline of continuously measuring and analyzing the value delivered by an organization in all its different perspectives (clinical, customer satisfaction, process improvement, etc.), and then adapting activities to maintain and increase that value. In the context of healthcare, value is measured by the health outcomes, such as; overall survival, recovery, or sustainment of health achieved at a given cost [where “cost” is measured in many dimensions and not just financial terms].
The Value Realization Framework (VRF)©, aligns organizational strategies with meaningful and actionable key performance indicators designed to yield sought results, and stand up a Value Management Office (VMO) that centralizes the expertise and authority needed to increase value. As organizations race ahead to adopt the latest technology vs. getting behind it, let us not forget the most valuable resource in any high performing unit– its people. For those organizations truly looking to innovate, consider a center of excellence (VMO) staffed with people, passion, process and a purpose – truly measuring value. Fixing our health care system depends on it – don’t sit on the sidelines.
“The universal development and reporting of outcomes at the medical condition level is the single highest priority to improve the performance of the health care system” – from Redefining Health Care, by Michael E. Porter and Elizabeth O. Teisberg, [i]
References:
[1] Kasich. J. (2017). The Way Forward on Health Care. New York Times. July 23, 2017. https://www.nytimes.com/2017/07/18/opinion/john-kasich-the-way-forward-on-health-care.html
[i] Porter, M. E., and Teisberg, E. O. Redefining health care: creating value-based competition on results. Harvard Business Press. 2006