Healthy Living Patient-Centered Life-Cycle (Pclc) Value Chain--Process Reform: Value-Based Competition

Continuing the serial on the PCLC Value Chain strategy [click hither for the commencement post inward the series], this post focuses on a 2d clinical physical care for inward ask of reform, that is, the transformation to "value-based competition."

Current Competition Models are Misdirected

Healthcare marketplace forces inward America over the yesteryear decade own got transitioned from managed aid together with capitation to integrated delivery (integration of wellness insurance amongst provider systems) to a vision inward which providers compete to improve aid character together with command costs, together with consumers pick out the best providers.[1]

There is at nowadays ground on whether contest should hold upward redirected by:

• Eliminating provider networks together with encouraging informed, financially responsible consumers to pick out the best provider for each condition
• Encouraging integrated delivery systems amongst incentives for teams of professionals to supply coordinated, efficient, evidence-based care, supported yesteryear state-of-the-art information technology
• Basing selection of particular healthcare services on local population needs together with centre competencies of the providers.

Why redirect competition? Because there's ample evidence that contest inward our healthcare scheme today is misdirected, for example:

• Instead of competing on the might to prevent, diagnose together with handling healthcare problems … contest today is amid wellness plans, hospitals, together with networks
• Instead of competing to improve healthcare value - the flat of aid character per dollar spent over fourth dimension … contest today focuses on cost reduction yesteryear transferring costs to person else without reducing total costs
• Instead of competing to create value at the flat of wellness problems yesteryear developing expertise, reducing errors, increasing efficiency, together with improving outcomes … contest today focuses on signing upward salubrious consumers, discounting prices to large payers together with groups, consolidating for increased bargaining power, together with cost shifting
• Instead of competing at the regional together with national flat … contest today is local
• Instead of competing based on distinctiveness yesteryear offering services together with products creating unique value … contest today focuses on edifice full-line services, forming unopen networks, reducing rivalry yesteryear consolidating amongst others, together with matching competitors
• Instead of focusing on obtaining together with sharing information nearly providers together with handling alternatives for specific atmospheric condition … most information shared today is nearly wellness plans together with consumer satisfaction surveys
• Instead of helping consumers detect the best aid value for specific conditions, simplifying billing together with administrative processes, paying bills promptly … payers today endeavour to attract salubrious subscribers, nurture charge per unit of measurement for people amongst wellness problems, bound treatments together with out-of-network services, together with shift costs to providers together with patients
• Instead of focusing on developing areas of excellence together with expertise yesteryear engaging inward character improvement programs together with purpose evidence-based practise guidelines to nurture aid effectiveness together with efficiency, together with to eradicate mistakes … providers today tend to offering every service, oftentimes below prevailing medical standards, cry patients amongst their ain network if at all, pass less fourth dimension amongst patients together with discharge them quickly, together with practise defensive medicine.[2]

Redirecting Competition

Redirecting contest inward this way focuses on delivering ameliorate outcomes together with reducing costs. Methods offered every bit ingredients for changing the electrical current scheme of contest include:

• Eliminate restrictions to contest together with choice. Remove preapprovals for handling or referrals, every bit good every bit network restrictions; enforce antitrust rules against collusion, excessive concentration, together with unfair practices; together with brand co-payments together with medical savings accounts to a greater extent than meaningful yesteryear applying high deductibles to give consumers incentives to seek high-value care, or else brand people cost-conscious of their insurance premium together with own got clearly defined standardized do goodness packages based on a community rated opportunity puddle footing that allows unambiguous comparisons betwixt dissimilar wellness plans.
• Make useful information to a greater extent than accessible. Collect together with widely disseminate appropriate information nearly treatments together with alternatives; brand at i time available information nearly providers' sense inward treating particular wellness problems; develop, continually nurture risk-adjusted outcomes data; standardize approximately information to enable national comparisons.
• Transparent pricing. Each provider sets a unmarried toll for each treatment/procedure, spell dissimilar providers laid dissimilar prices; toll estimates are made available inward advance to enable comparisons.
• Simplified billing. Use i nib per hospitalization or catamenia of chronic care; payers own got legal responsibleness for medical bills of paid-up subscribers.
• Nondiscriminatory insurance. Eliminate re-underwriting; purpose assigned opportunity pools for those needing them; require wellness excogitation coverage that would create equity together with value throughout the system.
• Better handling coverage. Use a national listing of minimum required coverage; additional coverage results from competition, non litigation.
• Fewer lawsuits. Provide to a greater extent than information that break risks together with inform consumers of their choices; boundary lawsuits to obsolete treatments together with carelessness.[3]

New Care Delivery Models

There several aid delivery models care, which focus on the institution of collaborative, multidisciplinary teams of providers who deliver to a greater extent than coordinated aid to their patients. These models include:

• Integrated care. "Integrated delivery systems" (IDSs) are built on the centre of a large, multispecialty medical grouping practice, oftentimes amongst links to hospitals, labs, pharmacies, together with other facilities, together with oftentimes amongst sizable revenue based on per capita prepayment (as opposed to fee for service). Examples of IDSs include Kaiser Permanente, HealthPartners, Group Health Cooperative, Cleveland Clinic, Mayo Clinic, together with Geisinger Health System). These systems execute processes to ensure the provision of appropriate, evidence-based care; offering the total spectrum of aid coordination; purpose of comprehensive, shared patient records; together with are able to improve efficiency on a large scale. Unlike a recommendation above, IDSs yesteryear their rattling nature bound access to networks of providers.[4]
• Integrated aid versus selective diversification. Unlike "integrated care," the strategy of "selective diversification" focuses on selecting the particular healthcare services to offering based on local population needs together with centre competencies of the providers. Whereas integrated aid tin go good for organizations amongst mechanisms for governance that balances the authorization of the scheme amongst the autonomy of commutation service units, selective diversification is to a greater extent than appropriate for organizations inward which facility-specific local boards retain ultimate fiduciary authority. Under the selective diversification model, hospitals compete non for the entire clinical continuum, but for each service separately, which takes payoff of their local expertise, marketplace potential together with fiscal resources.[5]

Value-Based Competition

The cornerstone of value-based contest is for providers who demonstrate ameliorate results to gain competitive payoff for higher profits/income. That is, clinicians whose patients rest healthier longer, recover to a greater extent than quickly, together with avoid complications--and who accomplish these positive outcomes at a to the lowest degree cost--would have to a greater extent than referrals, a higher payment rate, and/or other fiscal rewards.

Let me commencement define what I hateful yesteryear "value." Value is measured yesteryear dividing the character of aid delivered yesteryear its cost, i.e., V = Q / C:

• Q (Quality) is defined every bit the grade to which aid is delivered safely, effectively together with equitably. The aid may include conventional together with choice interventions for treating illness, every bit good every bit wellness intervention for prevention together with wellness optimization. Quality tin hold upward measured based physical care for compliance standards, clinical outcomes standards, or both.
• C (Cost) is defined every bit the grade to which the aid is delivered efficiently together with economically.
• V (Value), therefore, tin hold upward defined every bit cost-effectiveness ("bang for the buck").

So, inward this sense, providers delivering the most cost-effective aid are producing the greatest value for the consumer, together with that value ought to hold upward recognized together with rewarded.

There is already approximately motility inward this direction. For example:

"Seeing depression fees for menage unit of measurement doctors every bit a weak link inward the nation's wellness aid system, approximately large employers together with wellness insurers are seeking novel ways to pay doctors to payoff high-quality medical care. An influential medical standards grouping plans to introduce a novel model today [11/7/07] for helping employers together with insurers to position the best primary aid doctors together with to steer patients their way. Those doctors, inward turn, would hold upward paid for to a greater extent than services than are currently reimbursed nether typical wellness excogitation payments for portion visits.

The see is to encourage doctors to encounter amongst patients for to a greater extent than than a few minutes during an portion see together with to likewise compensate them, or nurse coordinators, for communicating amongst patients yesteryear telephone together with email exterior portion hours. Doctors would likewise hold upward compensated for helping patients grapple chronic atmospheric condition - similar reminding diabetic people to accept their insulin-- together with would hold upward encouraged to transmit prescriptions electronically.

The grouping proposing this model, the National Committee for Quality Assurance, a nonprofit scheme focused on wellness care, plans to introduce its excogitation today inward Washington at a large coming together of doctors, insurers together with employers that supply wellness benefits."[6]

A related model promoting value-based contest on results involves having providers grade "integrated practise units" (IPUs) that trace together the talent together with facilities required to deliver coordinated aid over the entire aid cycle (i.e., each episode of care) for each patient. These IPUs would include all providers treating a patient together with all services delivered yesteryear these teams, from diagnosis to handling to rehabilitation together with long term management, together with fifty-fifty prevention. The IPUs focus on particular wellness status for which they own got expertise enabling them to demonstrate superb clinical results together with efficiencies. Both risk-adjusted outcomes together with costs would hold upward measured over the total cycle of care; non for discrete interventions or procedures. Teams who own got ameliorate outcomes at lower costs, i.e., deliver greater value, own got a competitive payoff together with have to a greater extent than referrals, every bit good every bit fiscal incentives. These comparisons would hold upward made at regional, national, together with fifty-fifty globe level, non exclusively locally inside their ain healthcare system; patients would hold upward given incentives to move to the best providers. Successful IPUs would, therefore, gain e'er greater sense treating particular atmospheric condition together with would railroad train e'er greater expertise together with efficiencies, thereby continually improving the character together with lowering the cost of aid delivered.

While coordinating aid inside multidisciplinary teams together with rewarding cost-effective aid are critical to improving our healthcare system, the IPU model has several shortcomings, including:

• It is rattling hard to categorize each patient's problems neatly into a finite laid of measure medical atmospheric condition since they oftentimes own got multiple (comorbid) atmospheric condition simultaneously requiring dissimilar treatments (e.g., Medicare patients are reported to endure from 5 dissimilar chronic diseases at once). Thus, in that location is oftentimes ask to deliver aid across multiple conditions, which agency such a complex patient cannot rely on a unmarried IPU specializing on exclusively i of his/her conditions. And it is unrealistic to await complex patients to pass lots of fourth dimension traveling to dissimilar IPUs, peculiarly inward rural areas where they may hold upward few together with far between.
• It is rattling hard to define together with capture valid together with reliable wellness outcomes information for rewarding goodness results, peculiarly since (a) it could accept many years for surely atmospheric condition to hold upward resolved, which makes value-based payment a problem; (b) the actions or inactions of the patients themselves influence the outcomes, which agency that both prevention of illness together with compliance to handling plans are both of import factors to consider; together with (c) in that location is insufficient purpose of wellness information technologies, along amongst the fact that most electrical current systems do non grip comprehensive clinical outcomes data.
• Specialists who are reputed to hold upward "the best" inward their plain already own got to a greater extent than patients than they tin handle. This agency referring to a greater extent than patients to them is hardly a payoff since the own got to plough them away.

For reasons such every bit these, I propose that large, multi-specialty grouping practices (i.e., the integrated delivery together with selective diversification systems described above) are ameliorate able than IPUs to supply high-value coordinated aid to the average patients amongst multiple problems. And they should include patient-centered medical homes, which I discussed inward my previous post.

Furthermore, nosotros must focus on defining ameliorate measures of aid value, which should teach good beyond the character metrics used today that are predominantly "process measures," non measures of clinical outcome (the results of care). For to a greater extent than nearly this issue, see this post.

In my adjacent post, I examine how to transform electrical current "pay for performance" into "pay for value" models that payoff providers together with insurers who offering high-value to patients/consumers.
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[1] Ginsburg, P. (2005). Competition In Health Care: Its Evolution Over The Past Decade, Health Affairs, 24, no. vi (2005): 1512-1522. Available at http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=R0406D
[3] Ibid
[4] Enthoven, A.C. & Tollen, L.A. (2005). Competition In Health Care: It Takes Systems to Pursue Quality together with Efficiency. Health Affairs. Available at http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.420v11
[5] Robinson, J.C. & Dratler, S. (2006). Corporate Structure together with Capital Strategy at Catholic HealthcareWest: Balancing mission together with margin inward the capital-intensive infirmary industry. Health Affairs; 25(1), 134-147. Available at /search?q=think-small-and-dont-rock-boat?_r=1&oref=slogin
[7] Porter, M.E. & Tiesberg, E.O. (2006). Redefining Health Care: Creating Value-Based Competition on Results. Harvard Business School Press.

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