This is the first article in our Harvard Business Review series. Over the next few weeks we’ll review Professor Michael Porter and Dr Thomas Lee’s publication from October 2013, ‘The Strategy that will fix healthcare- Providers must lead the way in making value the overarching goal’. The discussion relates to all health systems & delivery organisations- private practices, medical centres, physician organisations, hospitals and insurer groups.
Healthcare systems worldwide are battling with rising costs and unsatisfactory quality. Why is this? Well, for several decades the current structure of healthcare delivery has been sustained by resting on its own set of mutually reinforcing elements:
The absence of accurate cost information: Do clinicians have any knowledge of what each component of care costs? Or any idea of how costs relate to the outcomes achieved? In most health organisations there is virtually no accurate information on the cost of the full cycle of care for a patient with a particular medical condition. Also, cost allocations are often based on charges, not actual costs.
The way clinicians are organised to deliver care: Largely siloed organization by specialty department and discrete service or independent private practice physicians. Delivery systems with duplicative service lines, as well as minimal integration of providers & service lines.
“Quality” measurement/metrics: Most often, these don’t gauge actual quality. Rather, they are process measures that capture compliance with practice guidelines and easy-to-measure, non-controversial clinical indicators (e.g. mortality, safety) that fall well short of actual outcomes.
Fee-for-service payments by specialty: Providers are generally rewarded for increasing volume, but that does not necessarily increase value! The focus is supply driven and centered around physician visits, hospitalizations, procedures and tests.
Fragmentation of patient populations: Every provider offers a full range of services; thus, most providers don’t see enough patients with a given medical condition
Limited Geographic reach: Health care delivery remains heavily local
IT systems: Siloed by department, location, type of service, and type of data (e.g. images). Existing IT systems often complicate rather than support integrated, multidisciplinary care.
This of course means that patients most often receive portions of their care from a variety of types of clinicians, usually in several different locations. Each encounter is separate from the others, and no one coordinates the care. Naturally, this leads to duplication of efforts, delays, and more expensive care.
As this goes on, providers will face lower incomes, patients will incur higher costs, and services will be restricted. In Part II of this article next week we’ll discuss the approach that’s needed in order for us to turn this around.