I was excited to read the article The Strategy That Will Fix Healthcare by Michael E. Porter and Thomas H. Lee, published in the October issue of the Harvard Business Review. However, I read skeptically wondering if there really is a fix? Is there really just one strategy that will fix healthcare?
I sat on the article for a while, digesting what I read, determining how to highlight the important points that this article raises and provide some food for thought.
The premise stated for the article is: “Around the world, every health care system is struggling with rising costs and uneven quality despite the hard work of well-intentioned, well-trained clinicians.” And it’s true; often times it seems the hard work to improve is one step forward and two steps back.
The core of the new strategy proposed by Porter and Lee is to maximize the value of patients by achieving the best outcomes at the lowest cost. Sounds ideal, yet as you read further, you discover that the current focus for a majority of the healthcare system versus the proposed focus are extreme opposites:
- Current: supply-driven healthcare systems organized around what physicians do
- Proposed: a patient-centered system centered on patients
- Current focus: volume and profitability (including patient visits, hospitalizations, procedures, and tests)
- Proposed: a focus on the actual patient outcomes achieved
- Current system: fragmented, where every local provider offers a full range of services
- Proposed: a system in which services for particular conditions are concentrated in health-delivery organizations and in the right locations to provide high-value care
These transitions from current to proposed are an “overarching strategy for transforming our healthcare system,” according to Porter and Lee. Not just single steps to take for the sake of change. And while a majority of our healthcare system is in the process of transforming to a value-based healthcare system, some organizations are taking on large-scale changes that have resulted in amazing improvements in outcomes and efficiency, and growth in market share.
Why Change Now?
There are several reasons that should compel healthcare organizations to change, including:
- The threat of reduced profit margins, if business continues to run as usual.
- The change in healthcare economics, including transparent pricing.
- And, the reality that patients will be asked to pay more. So without changing their model of business, healthcare organizations will end up paying more for patient care.
The Strategy for Value Transformation
“Moving to a high-value health care delivery system has six components that are interdependent and mutually reinforcing,” state Porter and Lee. These components include:
- Organizing into integrated practice units
- Measuring outcomes and costs for every patient
- Move to bundled payments for care cycles
- Integrate care delivery across separate facilities
- Expand excellent services across geography
- And, build an enabling information technology platform
Porter and Lee offer a reason for why the current system has been so resistant to change and incremental steps have little impact. The current system is an “interlocking structure,” which is self-reliant, fragmented, and siloed. A good example is delivery systems with duplicative service lines and little integration.
The article highlights the fact that healthcare reforms have featured “successions of narrow ‘solutions’, yet none of the solutions tackle the underlying strategic and structural problems that work against value for patients.” The article provides a list of the reforms that have been undertaken; it’s eye opening to see them listed all together. The fact that none of the reforms have worked to wholeheartedly change the healthcare system for the better leads one to believe there needs to be a broader approach such as the one Porter and Lee propose.
The article continues to provide a comparative analysis of the elements listed above in the current system to the proposed enhancements, including primary care vs. specialty; outcome measurement to drive improvement; and the correlation of outcomes to cost — we know that poor outcomes increase costs.
The value of implementing “the fix” of maximizing value for patients comes by providing faster treatments and better outcomes, which reduce costs, and usually improve market share.
Margaret Alrutz, the Director of Healthcare Strategy at Steelcase Health, provided this insight that summarizes the relevancy of this article: “This article has a number of interesting discussions around the changing needs of healthcare metrics. For example, the sidebar list of “Outcomes That Matter To Patients” may be common sense, but it is also worthwhile to consider the challenge of accurately measuring these kinds of outcomes. For Steelcase Health, we see these kinds of long-term and detailed measures as an opportunity to consider the ways in which the space within healthcare environments could unburden providers from the extra work of gathering data. In addition, it points to the new kinds of partners that we must work with in the future relative to the coordination of data into useful information and knowledge.”
What do you think? Have you read The Strategy That Will Fix Health Care? If not, I encourage you to do so before you reply. And speaking of replies, there are some interesting perspectives that add food-for-thought in the reply section of the article.