Value based healthcare Introduction; Lecture 1 part A
Value-based health care (VBHC)
- It is a vision on how to improve health care systems in general
- Research on the interpretation and implementation on VBHC in NL
Micheal Porter – The roots of VBHC
- Competition drives improvement
- Value chain: all the activities an organization performs, which together
create a valuable product or service
- Central premise: in any industry, a successful and sustainable enterprise
needs te create value …
- Patient value The health-related outcomes that matter to patients,
divided by what it costs to achieve those outcomes
Overarching goal for all system stakeholders; to improve value
What do patients want? What matters most to patients?
- To get better to achieve the best possible treatments outcomes
- Outcomes The effects of care on the health status of patients
Usually multiple relevant outcomes
Costs
- Treatment come at a price – we pay for our health care
o Some treatments are more expensive than others
o Some providers charge higher price
If two providers/ treatments have the exact same outcome, we should
go for the less costly one
Value for patients
- The health status they achieve (outcomes) and the price they have to pay
for it (costs)
- Optimizing this equation becomes the central goal, the best outcomes, as
efficiently as possible
o Key principle Value in health care is created at the level of
medical conditions, over the full cycle of care
- Value = outcomes / costs
Value is created at the level of medical conditions
- Patients seek health care to address health related issues/ disturbances
- Those issues (complaints, symptoms) are usually directly related to a
particular medical condition
- Ergo; professionals create value by addressing specific conditions
- The idea is that health care is not delivered as narrow as medical
experience. Value is not created at a level of specific medical conditions.
Value is created over the full cycle of care
- Value is generated through the full set of activities (i.e. value chain)
- Full care cycle; from start to end (diagnosis to rehabilitation)
o Surgery for example, is only one element of the full cycle. Patient
outcomes also matters, like how someone feels after a surgery
Value should be the goal – value is created at the level of medical conditions over
full cycles
- 1. Measure & reporting – 2. Organizing – 3. Payment
,Measurement & reporting
- Providers should systematically measure the outcomes and costs of their
care cycles
- Results should be reported and publicly disclosed (transparency)
- This will enable effective comparisons and allow all parties to make more
value-based decisions
Organizing
- Organizational structures based on value creation; at the level of care
cycles (value chain) for medical conditions
- Radically different from the traditional structure of hospital based on
medical specialties
- Integrated practice unit (IPU); multidisciplinary team, coordinating all the
specialized knowledge and skills that are needed to address a medical
condition
Payment
- Payment aligned with value creation, reimbursing care cycles at the level
of medical conditions
- Bundled payment instead of multiple separate bills within the same care
cycle (i.e. fee-for-service)
- Incentivizing value (not volume)
Value-based payment
- Removing adverse incentives (e.g. for overtreatment)
- Alternative to fee-for-service (providers are rewarded for volume)
- Instead; rewarding good outcomes & efficiency
1. Rewarding with more patients (Porter). Rewarding with more
patients
2. Financial bonus (pay-for-performance). Directly reward a provider
with a financial bonus
Value-based competition
1. Systematic outcome measurement (start measuring the date that matters
to patients and share the information with the patients)
2. Excellent providers rewarded with more patients = more patients receiving
excellent care
3. Providers who cannot keep up should restructure or go out of business
(which would be good for patient value)
The right kind of competition will unleash “dramatic improvements in
value” – porter & Teisberg
Integrated practice units Lecture 1, part B
Hospitals have a structure based on medical departments, that is also how the
authority and the money is structured – along the line of medical specialities.
Integrated practice units (IPUs)
- Hospital and other health care providers are typically organized along the
lines of medical specialties (e.g. neurology, oncology)
- Porter and colleagues propose a radical reorganization aligned with care
cycles for medical conditions (and the creation of value)
IPUs Organizational units in which a multidisciplinary team of (dedicated)
professionals and supporting staff are grouped together (and co-located) to
, coordinate their independent tasks with the overarching goal to improve value
to a particular group of patients
Confusion about IPUs
- Some miss the crucial point that the concept refers to organizational units
- Multidisciplinary collaboration is common, IPUs are rare
o The key thing is there should be a unit (the same budget, their own
decision-making unit) They refer to organizational units
- Part B; clarifying the meaning of IPUs (Porter VBHC and Mintzberg)
Organizational structures (Mintzberg)
- Organizational structure The way an organization designs it task
allocation and coordination
- Organizations have various design ‘knobs’ to turn
- Division of labor divided different tasks and to coordination of these tasks.
Unit grouping
- Organizations have various ‘knobs’ (design parameters they can turn
o Job specialization, behavior formalization, unit size, unit grouping,
vertical and horizontal decentralization, training and introduction)
- Unit grouping (important knob) – achieve coordination’s in two mean ways
o Lines of authority (coordination via supervision)
o Close contact (coordination via informal communication)
Mutual adjustment
Unit grouping in two typical ways
- Function-based grouping
o Each line represents a group of people with a particular set of
knowledge and/ or skills
o These units are grouped based on the means (the functions) of a
production process
- Market-based grouping
o Each line represents a group of people that serve a partical market
o These units are grouped based on the ends of a production process
Patients with a common set of needs
The structure of hospitals – Hospitals typically have a ‘functional design’ the
organizational structure is based on specialized skills
- Hospitals group their units based on separate functions (means)
- Long tradition
o History of medical specialization
o Increasingly specialized professionals with complex knowledge and
skills
o Grouped into speciality-based units
Criticism and alternative
- Outdated legacies of a past century of medical specialization
- Issue of coordination and dealing with interdependencies of workflows
between units
o Coordination gets lost or opportunities missed
The VBHC alternative; IPUs
- They embody the central principle of a value-driven organization; to
organize around customer needs, not the supply of particular services
, Reorganizing into (market-based) IPUs
- Pressure hosipitals to do what they are good at. Maybe you want a hospital
to focus on some special catagories.
- Volume tarsals (volumenormen)
- Higher value in more concentrate locations
Practical changed (in NL)
- History and interest (you cannot just wash this away)
o Porter seems to underestimate these things. Cultural believes.
- Public opinion (What is right and what is wrong. Moral arguments)
- Radical versus incremental change
- Informal collaboration versus formal reorganization
o Connections between units. There are operating on the level of
patient’s groups and do units on patients care, but informal. How
can we improve the outcomes for patients?
Value based health care – IPUs in practice; Diabeter
75% of the people in the Netherlands develop diabetes type 2, this type finds its
cause in lifestyle
Lifetime focus is essential to improve wellbeing and outcomes for T1 diabetes
Quality of life, the most important outcome for patients, is directly and indirectly
influenced by glycemic control
Better value diabetes care = better outcomes for diabetes/ lower costs for
diabetes care
A value based approach to treat Type 1 Diabetes
- When the patients come to the clinic there is a team
- Focus only on type 1 and specialize in T1
Diabeter claim is that it has higher investments and uses more technology, but
this leads to lower total average annual costs per patient compare to other NLD
health providers
VBHC in Erasmus MC
Patient as a partner personalized care
Implementing PROM’s in daily care.
Integral Care Agreement
- Value based
- Together with the patient, inclusive
- Right care at right place
- Focus on health instead of disease
- Good working environment for healthcare professionals
Programmatic approach
- Governance – organization chart
VBHC PROM structure
1. Generic
Value-based health care (VBHC)
- It is a vision on how to improve health care systems in general
- Research on the interpretation and implementation on VBHC in NL
Micheal Porter – The roots of VBHC
- Competition drives improvement
- Value chain: all the activities an organization performs, which together
create a valuable product or service
- Central premise: in any industry, a successful and sustainable enterprise
needs te create value …
- Patient value The health-related outcomes that matter to patients,
divided by what it costs to achieve those outcomes
Overarching goal for all system stakeholders; to improve value
What do patients want? What matters most to patients?
- To get better to achieve the best possible treatments outcomes
- Outcomes The effects of care on the health status of patients
Usually multiple relevant outcomes
Costs
- Treatment come at a price – we pay for our health care
o Some treatments are more expensive than others
o Some providers charge higher price
If two providers/ treatments have the exact same outcome, we should
go for the less costly one
Value for patients
- The health status they achieve (outcomes) and the price they have to pay
for it (costs)
- Optimizing this equation becomes the central goal, the best outcomes, as
efficiently as possible
o Key principle Value in health care is created at the level of
medical conditions, over the full cycle of care
- Value = outcomes / costs
Value is created at the level of medical conditions
- Patients seek health care to address health related issues/ disturbances
- Those issues (complaints, symptoms) are usually directly related to a
particular medical condition
- Ergo; professionals create value by addressing specific conditions
- The idea is that health care is not delivered as narrow as medical
experience. Value is not created at a level of specific medical conditions.
Value is created over the full cycle of care
- Value is generated through the full set of activities (i.e. value chain)
- Full care cycle; from start to end (diagnosis to rehabilitation)
o Surgery for example, is only one element of the full cycle. Patient
outcomes also matters, like how someone feels after a surgery
Value should be the goal – value is created at the level of medical conditions over
full cycles
- 1. Measure & reporting – 2. Organizing – 3. Payment
,Measurement & reporting
- Providers should systematically measure the outcomes and costs of their
care cycles
- Results should be reported and publicly disclosed (transparency)
- This will enable effective comparisons and allow all parties to make more
value-based decisions
Organizing
- Organizational structures based on value creation; at the level of care
cycles (value chain) for medical conditions
- Radically different from the traditional structure of hospital based on
medical specialties
- Integrated practice unit (IPU); multidisciplinary team, coordinating all the
specialized knowledge and skills that are needed to address a medical
condition
Payment
- Payment aligned with value creation, reimbursing care cycles at the level
of medical conditions
- Bundled payment instead of multiple separate bills within the same care
cycle (i.e. fee-for-service)
- Incentivizing value (not volume)
Value-based payment
- Removing adverse incentives (e.g. for overtreatment)
- Alternative to fee-for-service (providers are rewarded for volume)
- Instead; rewarding good outcomes & efficiency
1. Rewarding with more patients (Porter). Rewarding with more
patients
2. Financial bonus (pay-for-performance). Directly reward a provider
with a financial bonus
Value-based competition
1. Systematic outcome measurement (start measuring the date that matters
to patients and share the information with the patients)
2. Excellent providers rewarded with more patients = more patients receiving
excellent care
3. Providers who cannot keep up should restructure or go out of business
(which would be good for patient value)
The right kind of competition will unleash “dramatic improvements in
value” – porter & Teisberg
Integrated practice units Lecture 1, part B
Hospitals have a structure based on medical departments, that is also how the
authority and the money is structured – along the line of medical specialities.
Integrated practice units (IPUs)
- Hospital and other health care providers are typically organized along the
lines of medical specialties (e.g. neurology, oncology)
- Porter and colleagues propose a radical reorganization aligned with care
cycles for medical conditions (and the creation of value)
IPUs Organizational units in which a multidisciplinary team of (dedicated)
professionals and supporting staff are grouped together (and co-located) to
, coordinate their independent tasks with the overarching goal to improve value
to a particular group of patients
Confusion about IPUs
- Some miss the crucial point that the concept refers to organizational units
- Multidisciplinary collaboration is common, IPUs are rare
o The key thing is there should be a unit (the same budget, their own
decision-making unit) They refer to organizational units
- Part B; clarifying the meaning of IPUs (Porter VBHC and Mintzberg)
Organizational structures (Mintzberg)
- Organizational structure The way an organization designs it task
allocation and coordination
- Organizations have various design ‘knobs’ to turn
- Division of labor divided different tasks and to coordination of these tasks.
Unit grouping
- Organizations have various ‘knobs’ (design parameters they can turn
o Job specialization, behavior formalization, unit size, unit grouping,
vertical and horizontal decentralization, training and introduction)
- Unit grouping (important knob) – achieve coordination’s in two mean ways
o Lines of authority (coordination via supervision)
o Close contact (coordination via informal communication)
Mutual adjustment
Unit grouping in two typical ways
- Function-based grouping
o Each line represents a group of people with a particular set of
knowledge and/ or skills
o These units are grouped based on the means (the functions) of a
production process
- Market-based grouping
o Each line represents a group of people that serve a partical market
o These units are grouped based on the ends of a production process
Patients with a common set of needs
The structure of hospitals – Hospitals typically have a ‘functional design’ the
organizational structure is based on specialized skills
- Hospitals group their units based on separate functions (means)
- Long tradition
o History of medical specialization
o Increasingly specialized professionals with complex knowledge and
skills
o Grouped into speciality-based units
Criticism and alternative
- Outdated legacies of a past century of medical specialization
- Issue of coordination and dealing with interdependencies of workflows
between units
o Coordination gets lost or opportunities missed
The VBHC alternative; IPUs
- They embody the central principle of a value-driven organization; to
organize around customer needs, not the supply of particular services
, Reorganizing into (market-based) IPUs
- Pressure hosipitals to do what they are good at. Maybe you want a hospital
to focus on some special catagories.
- Volume tarsals (volumenormen)
- Higher value in more concentrate locations
Practical changed (in NL)
- History and interest (you cannot just wash this away)
o Porter seems to underestimate these things. Cultural believes.
- Public opinion (What is right and what is wrong. Moral arguments)
- Radical versus incremental change
- Informal collaboration versus formal reorganization
o Connections between units. There are operating on the level of
patient’s groups and do units on patients care, but informal. How
can we improve the outcomes for patients?
Value based health care – IPUs in practice; Diabeter
75% of the people in the Netherlands develop diabetes type 2, this type finds its
cause in lifestyle
Lifetime focus is essential to improve wellbeing and outcomes for T1 diabetes
Quality of life, the most important outcome for patients, is directly and indirectly
influenced by glycemic control
Better value diabetes care = better outcomes for diabetes/ lower costs for
diabetes care
A value based approach to treat Type 1 Diabetes
- When the patients come to the clinic there is a team
- Focus only on type 1 and specialize in T1
Diabeter claim is that it has higher investments and uses more technology, but
this leads to lower total average annual costs per patient compare to other NLD
health providers
VBHC in Erasmus MC
Patient as a partner personalized care
Implementing PROM’s in daily care.
Integral Care Agreement
- Value based
- Together with the patient, inclusive
- Right care at right place
- Focus on health instead of disease
- Good working environment for healthcare professionals
Programmatic approach
- Governance – organization chart
VBHC PROM structure
1. Generic
