Traditionally, healthcare has been delivered, priced and measured (if at all the hospitals do measure it) based on the instances of care, that is, multiple periodic episodes of visits to a hospital during course of treatment rather than final measurable outcome of care provided and its value perceived.
The Value Equation of healthcare has 2 key components: Outcome as a Numerator and Cost as a Denominator.
Value Equation= Outcome/ Cost
There has to be a fine balance in comparing the inputs (cost) with outputs (perceived outcomes). This is a real measure to judge value of outcomes. It is important to improve the numerator that is the Outcome. Only by improving Outcomes can we reduce the cost.
It is a myth to believe it is expensive to improve outcomes without increasing costs. Unless we upend the present healthcare structure which views patient care in a disintegrated way, the myth would persist and stand to be true.
Whereas focusing on integrated-care delivery has an incremental positive impact on the numerator (that is Outcome) and hence improves overall value proposition for the patient while keeping costs under control. The integrated delivery model (what Professor Michael E Porter coined as Integrated Practice Units) pulls the cost upfront but outcomes are reached fast and the cost later comes down.
To achieve as stated above, Value Agendas are prescribed for healthcare to be delivered, monitored and measured.
Measure outcomes and cost for every patient:
Presently, way we measure healthcare cost is based on cost of individual services that are a part of the entire treatment cycle of a patient rather than the cumulative cost of outcome. In other words, we are measuring processes not outcomes. The approach is fragmented not unified wherein we measure cost of individual service rendered during a treatment cycle
However, the cost of individual services is not important. What we should measure performance against is the Cumulative Cost of Outcomes. For instance, in case of a Head and neck cancer case the Cumulative Outcome parameters would be overall length of stay, post-surgery infection rates, Survival arte/ whether the patient was able to speak? Was he able to eat normally? Maintenance of facial appearance? How long it takes to achieve remissions and get back to normal life. Complication/ fatigue/ depression/ anxiety etc.
We must learn how to measure cost and outcomes in line of care for every patient, that is, constantly while care is delivered and until documented, expected evidence-based outcomes are achieved within prescribed period of time.
Bundled Price Mechanism:
This mechanism aligns payment to the value delivered. Here the payment is provided for whole cycle of care rather than sporadic, intermediate instances of care. Outcome-based payment model helps us to control cost of care in line with the results achieved and value perceived. It prescribes to pay for care based on realistic evidence-based outcomes expected from care.
Most care providers follow ‘Cost plus Price model’ wherein they assess their input costs of various cost heads (professional fee to surgeons, purchase price of implant from vendors, room charges, nursing charges, cost of reagents and consumables etc.) and add to that a margin to arrive at a Price that the patient pays. The basic flaw in such pricing model is a lack of connect between cost of care and value delivered. Since there is no link between cost and value, we end up paying for individual services without holding provider accountable for outcome. And this is a disincentive for value and innovation.
On the other hand ‘Price minus Cost model’ prescribes value-based payment wherein it completely de-couples disintegrated cost points from the final bill. Price of care is assessed based on evidence-based outcomes achieved rather than instances of care delivered during periodic episodes of patient at the hospital.
Michael Porter vehemently prescribes Time-Driven Activity Based Costing (TD-ABC) which is calculated on the basis of actual use of resources utilized during patient’s care process and is aggregated over the full cycle of care, not for departments, services, or line items.
Integrated Practice Units (IPUs):
Current structure views every patient as a unique case and delivers care in disintegrated way. The idea here is to tie parts of delivery systems together. From standalone organizations to IPUs. Need to integrate the delivery systems.
Let us take an example of a patient suffering from Migraine. In a traditional model, the care for such a patient would be centered around services and specialties. So he would consult a physician who would prescribe some tests and then refer her for cross consultation with a Neurologist or a Cardiologist which would be interposed with visits to a dietitian, radiology department and so on. So what this means is that the entire process is sequential process, punctuated by waiting time and involves separate subsequent interactions during line of care (treatment of Migraine). Besides, it leads to administrative complexity for the hospital as it involves lot of coordination which is hard to do. Such a care is delivered by a ‘pick up’ team, if at all a team as the people involved in the team are randomly involved. Problems are not that physicians/ nurses are not hard working, smart, well trained. Problem is that we have put clinicians in a structure in which they can’t deliver value. So, we have to change.
Integrated Practice Units, on the other hand, integrates all the stakeholders of care into one cohesive wherein affiliated centers are tied-up for integrated evaluation.
Cost impact in both these models (Instance-based care Vs. IPUs) is stark and evident. While the first model stretches the cost over a long time, what IPU model does is pull cost upfront but the outcomes are reached fast and the cost later comes down.
Reorganize the way we deliver care
Presently healthcare is organized around care provider; it should rather be focused around the care-taker (patient).
Healthcare delivery at a local community level has become a mom-and-pop industry with a lot of redundancy and duplication of resources, capital and capability. The current system is very fragmented. Every hospital is providing everything and hence the volume is scattered. This results in duplication of assets and underutilized capacity resulting in cost burden on patients owing to lower volumes and less-than-critical-mass patient flow to hospitals.
Community care providers have to give away their under-one-roof models because it results in capacity under-utilization, resource wastage and redundancies leading to cost escalations to sustain their working capital. Local areas cannot have do-it-all care providers. Centers of excellence in any specialty should spread out to provide same level of care in remote areas. We need the care close by but not necessary managed by local mom-and-pop center
Enabling IT platforms:
Integrated IT platform can prove to be crucial enabler to move towards a value-based health care delivery model that improves patient outcomes. Together with a growing recognition of the importance of IT, the drive towards patient-centric services is a central theme in healthcare organizations across the region.
Healthcare IT platforms, particularly, face daunting task in ensuring that the language is uniformly coded and understood universally (as per ICD codes), heterogeneity of data is well-compartmentalized and stored during and after the care cycle is completed. The data needs to be ‘restrictively accessible’ to stakeholders while ensuring patient’s confidentiality. Using software that provides simple access to information at the point of care, and hardware that enables communication of data across facilities and mobilizes the access points, facilitates provision of improved patient care by healthcare providers.
While medical staff and patients have always been and will continue to be at the heart of healthcare, the value of the use of IT in a patient-centric approach to care is starting to reveal itself and for everyone concerned the improvements are there to see. With its increasing adoption, healthcare IT is likely to contribute significantly to the overall level of care that patients in the region benefit from.
What about Primary Care?
Some may ask, can the above agenda be implemented in preventive and primary care level as well?
Current structure makes is seem ‘mission impossible’. There is incredible heterogeneity of patients. Imagine a hospital’s out-patient wing 800 patient registrations in a day with diverse healthcare needs from those who need a basic medical check-up to post-operative follow up patients. It is evident that the nature and extent of care needed across the continuum is very different and would need different set of care-givers. Primary care cannot be given monolithic service.
Best primary care practices have started to get teams delivering care based on patients or set of patient’s needs. For example- A Diabetes care program would have a unique set of medical and paramedical professionals than say an Arthritis care program. Hence, we need to define the patient needs in a holistic way and then design a program that revolves around patient’s needs. In other words, this propagates having IPUs to cure a common set of needs (diabetes, joint pain, cancer screening, women’s health, pediatric care etc.).
The bottom line is that when we define a patient need, we need to have all expertise on the team to help coach the patient and deliver health care. Some patient may be highly complex and if so they have to be taken care by multiple integrated units.
Conclusion
The way we practice healthcare has to change dramatically for it to stem cost and also deliver value to the patient. The key aim in delivering care has to be to judge efficiency and effectiveness on basis of value and outcomes not episodes of care.
If applied in a cohesive manner with one factor supplementing the other, making it an integrated value delivery chain, the above steps can dramatically improve value of healthcare
Disclaimer: This blog is inspired from research of Professor Michael Porter on Value-Based Health Care Delivery for restructuring health care systems
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