Monday, November 26, 2007

Patient-Centered Life-Cycle (PCLC) Value Chain--Process Reform: Universal Health Coverage and Personal Responsibility

Having affordable insurance and comprehensive coverage is a cornerstone of the PCLC Value Chain. Nevertheless, one of the issues generating the greatest debate concerns universal health coverage (i.e., healthcare for all), along with the related issue of "personal responsibility." The argument tends to center on whether the young and the healthy should help pay for care that older and ill persons need, how much they should pay, and the degree of responsibility people have for staying healthy and paying for their care when they get sick. In an earlier series of posts, I made the case that all Americans are worthy of health insurance, and that personal responsibility is a complex issue we must address, but for which there are no quick fixes.

Well, I recently corresponded with two individuals who have ideas about this topic, which I present below.

Person 1 wrote:
Just an idea, but since some here are so determined that Health Care for Everyone should be equal (but not equally paid for) and that everyone is as "deserving" of "good" health care as the next person, and that EVERYONE should pay for this based (somehow) on his or her income (those with more income should pay more than those with less income but EVERYONE should get the same care) I would suggest that these folks move to Canada or Denmark, or Switzerland, or any one of several other countries the next time they need heart surgery.

While we, in this country, do not have the PERFECT health care system, we still have the best. Yes, some of us have better care than others because we PAY more for it than others. But, let me see now... some of us also have better housing than others because we pay for it, some of us have better cars because we pay for it, some of us have better educations because we paid for it, and etc, and etc, and etc.....

I will be the first to admit that there are differences in the level of care provided in this country. But, I do not know of ANY person that has been refused treatment at the emergency room because of lack of insurance or lack of money. No, they do not get individual rooms in the hospital nor do they usually get the services of the most highly qualified and educated doctors and nurses. But they DO get better care than 95% of the rest of the world and that is pretty darn good.

I, like millions of others in this country, have worked very very hard for what I have and I have gone through periods in my life when I did not have much of anything at all. But, I never went without basic health care and I am in pretty good shape for my age. I did, however, work very hard to improve upon my circumstances and succeeded very well. Not as much as many many other people, but everything is relative. I have a nice home, a nice retirement, and well educated and well behaved children and grandchildren. We have our differences, of course, but we have a work ethic that I hope most other Americans have. We truly believe we totally deserve what we have because we have EARNED it. Do I feel sympathy for those that do not have a private room in the hospital or a family doctor that they can see on very short notice just about any time and all of the other things that we pay for? Sure I do. But NOT enough sympathy to want to see the health care system in this country (warts and all) made "universal" and forced to fall down to the systems of much of the rest of the world.

I think we (ALL of us that are willing to work for a living) have it pretty doggone good. And for those that are not willing to work for it, I feel sorry for you but not sorry enough to give up what I have so you can have what you want. Not hardly pilgrim!
I Replied

A logical argument …but I only wish it were so simple. Let's start by examining the premises upon which your case is built.

You wrote: America has the best healthcare in the world.

Here's a quote from a recent article in a leading healthcare journal titled, "Mirror, Mirror on the Wall: An International Update on the Comparative Performance of American Health Care," which refutes your premise:

"Despite having the most costly health system in the world, the United States consistently underperforms on most dimensions of performance, relative to other countries. This report…includes data from surveys of patients, as well as information from primary care physicians about their medical practices and views of their countries' health systems. Compared with five other nations-Australia, Canada, Germany, New Zealand, the United Kingdom-the U.S. health care system ranks last or next-to-last on five dimensions of a high performance health system: quality, access, efficiency, equity, and healthy lives. The U.S. is the only country in the study without universal health insurance coverage, partly accounting for its poor performance on access, equity, and health outcomes. The inclusion of physician survey data also shows the U.S. lagging in adoption of information technology and use of nurses to improve care coordination for the chronically ill." (Here's the link).

Other convincing data shows that the US lags behind many industrialized countries in delivering primary care, access and quality. See, for example, the data from this research: "New National Scorecard--U.S. Health Care System Gets Poor Scores on Quality, Access, Efficiency, and Equity, which is available at this link.

You wrote: People who work for a living have it good.

Well, this is a big: IT DEPENDS. Consider the following:
  • "Over 8 in 10 uninsured people came from working families - almost 70 percent from families with one or more full-time workers and 11 percent from families with part-time workers.
  • The percentage of people (workers and dependents) with employment-based health insurance has dropped from 70 percent in 1987 to 59.5 percent in 2005. This is the lowest level of employment-based insurance coverage in more than a decade.
  • Nearly 40 percent of the uninsured population reside in households that earn $50,000 or more. A growing number of middle-income families cannot afford health insurance payments even when coverage is offered by their employers." (Here's the link).
And there are many reasons for people not having coverage, including:
  • Health insurance is unaffordable to many, including individuals who are unable to get affordable individual coverage due to cost or pre-existing medical conditions.
  • Many employers do not offer health insurance coverage.
  • People who lose their jobs often lose their health insurance.
  • Some workers are not eligible for health insurance offered by their employer.
  • Workers and individuals do not take-up coverage that is available.
  • People may be poor but not eligible for public coverage, for example, childless adults are generally ineligible regardless of income.
  • Individuals are eligible for public programs, but are not enrolled."
  • (references: Why are people uninsured #1 and Why are people uninsured #2).
And to make matters worse, the uninsured who do pay are typically charged much more for the same procedures and medications than insured folks because they cannot negotiate discounts, which insurance companies do.

About getting care in emergency rooms, about 20 percent of the uninsured (vs. 3 percent of those with coverage) say their usual source of care is the emergency room (Here's the link).

This is not solution to the problem of the uninsured because, for example:
  • Uninsured diabetics go years without any preventive care because lack of ability to pay, but once their feet become necrotic and they're rushed to the ER in need an amputation, we'll pay for the operation in the ICU.
  • Emergency room care does not include treating cancer with chemotherapy or many other life saving therapies.
  • The "charity care" ERs are required to give is money hospitals try to recover by raising costs for all of us, e.g., through higher insurance premiums, deductibles, co--pays, and other out-of-pocket expenses.
Consider the following study showing that, despite access to the ER, the uninsured do NOT get care when they need it:
"Adults without coverage go without needed care. The uninsured are much less likely to receive preventive and routine care, such as mammograms, pap smears, or screenings for colon cancer. Only 18% of uninsured patients reported receiving a screening for colon cancer, compared to 56% of insured patients. While they can obtain care at the emergency department or a community clinic, uninsured adults are more likely to lack a regular source of care and more likely to forgo needed care. According to the Commonwealth Fund Biennial Health Insurance Survey, almost half of uninsured individuals will not seek care when they have a medical problem, compared to just 15% of insured individuals.

Adults without coverage have worse health outcomes. The Institute of Medicine reviewed 130 studies published in the past 20 years and found that uninsured patients consistently have worse health outcomes. For example, compared to patients with private insurance coverage:
  • Uninsured patients with breast cancer have 30 to 50% higher mortality rates;
  • Uninsured patients with colon cancer have 50 to 60% higher mortality rates; and
  • Uninsured accident victims have a 37% higher mortality rate.
Other studies have found that uninsured patients with chronic conditions are almost twice as likely to visit an emergency department or be hospitalized as insured patients.

Short-term stabilization is not the same as long-term care health management. Because uninsured patients lack routine care, their chronic conditions are often poorly managed, increasing the likelihood of serious, acute complications. Once hospitalized, they receive treatment for acute needs but probably don't receive appropriate follow-up care, resulting in worse health outcomes over the long term.

Uninsured children also lack access to care and experience worse health outcomes. Because uninsured patients lack routine care, their chronic conditions are often poorly managed, increasing the likelihood of serious, acute complications. Once hospitalized, they receive treatment for acute needs but probably don't receive appropriate follow-up care, resulting in worse health outcomes over the long term.

The Bottom Line

Health coverage matters. Children and adults without health insurance can receive care from California's safety net or in an emergency situation. However, studies consistently demonstrate that California adults and children without insurance have difficulty accessing needed care and are more likely to have worse health outcomes." (see this link).
Person 1 responded:
There are VAST differences between the overall economies and populations of the countries you name and the United States. Universal health care stands a much better chance of succeeding and actually working in countries with relatively small populations such as Australia and New Zealand. Even Canada and the United Kingdom have systems that are NOT totally "universal" in nature. Private care in these countries is readily available if a person is willing to pay for it. But the horror stories of people that cannot afford it waiting for MONTHS to get in to see a (usually) lower tier health care professional are rampant. THAT is why so many well to do and middle class people from these countries come to the United States so often when quality health care is needed.

Your second point deserves some discussion too. "employment-based health insurance has dropped from 70 percent in 1987 to 59.5 percent in 2005." Probably true although I have seen some reports that dispute these numbers. But, granted, the numer of people with EMPLOYMENT based health insurance has dropped. That does NOT mean that those people that have lost their company health card do not have access to health care that, in most cases, is just about as cheap as what they were paying for before. Think about it, MOST people in this country do NOT require expensive and long range health care so therefore must pay for only those routine matters that come up from time to time. Again, granted that those that DO require expensive and/or long term care and DO NOT have employer paid insurance and have chosen to spend their money on other things than private health insurance face formidable obstacles. I would argue, however, that even these people are not thrown out on the street when they go to the emergency room at our hospitals. As I said before, they get care, just (perhaps) not the highest quality care. As far as those households that earn $50,000 or more, just how does this compare to the income levels of families 50 years that did earned enough to have an equivilant standard of living? One of the BIG differences is, of course, the PERCEPTION of what is REQUIRED to live these days. Two cars (or actuallly 2.5 cars), 3 TVS, Cable TV, significantly more expenditures on WANTS rather than NEEDS, and many other similar expenditures. I can argue that the LACK of health care (if it exists at all) is a result of personal CHOICE. Fifty years ago these "middle class families" had a greater sense of what was important and budgeted accordingly. This argument could, of course, be the topic (and it has) of many professional papers and conferences.

The above arguments can apply to the rest of your post as well. In short, much of the problem with health care availability can be attributed to PERSONAL CHOICE. Not ALL, of course. There ARE a lot of people that have legitimate problems, NOT OF THEIR OWN MAKING but our safety nets generally provide a basic level of care. For those whose problems are of their own making (deadbeats, drug addicts, alcoholics, people that refuse to work at ALL, and others) I, and MILLIONS of others, do not feel it is MY obligation to pay for their problems that result from their own personal choices.
I wrote back:

Note that when I refer to universal healthcare, I’m not necessarily speaking of a single-payer system. I believe that in the US a combination of private insurers and expanded public programs is probably most feasible solution to dealing with the uninsured since the 170 million or so people (including family members) currently with comprehensive health insurance--paid in large part by their employers--would be unlikely to give it up for some untested universal healthcare system.

Anyway, when it comes to waiting for care, while people in the US go without needed healthcare because of cost, more often than people do in the other countries, waiting time for specialized healthcare services (e.g., elective surgery) is typically shorter in America than in other countries, at least for insured Americans. However, the US ranks low when it comes to the prompt accessibility of appointments with primary care physicians, often waiting six or more days for an appointment, and having trouble making an appointment on weekends and evenings [ reference ] .

So, waiting time for non-emergency care is an issue in countries with universal healthcare. Nevertheless, things are improving in many of them [ reference ]. And why “medical tourism” to the US is a way for them to get such specialized care more quickly, Americans are going abroad for their care because it’s so much less expensive and the quality is just a good. In other words, there are problems with both systems. I contend that access to excellent primary and specialist care, even if there's a longer wait for elective surgery, is a better option than not being able to afford excellent care.

On to your good point about what people can afford based on their priorities and perceptions.

This is how Jeff Goldsmith, president of Health Futures Inc--a firm specializing in corporate strategic planning and forecasting future health care trends--explains the issue of households earning $50,000 or more and not having insurance:
“Families with incomes above $50,000 a year account for an improbable 93% of the 2.1 million increase in the uninsured, and now represent 38% of the total uninsured in the United States. Two-thirds of the 2005-2006 increase was actually in families with incomes above $75,000! How far up into the middle class these incomes put someone obviously depends on where they live. In Manhattan, $75,000 a year is not a lot of money (consider that just parking your car, if you are foolish enough to own one, can cost $500 a month). In Topeka, Kansas, however, it’s upper middle class.

What we don’t know (and need to know) is exactly why nearly 18 million people whose families earn more than $50,000 a year lack health insurance. We can speculate that some of them are young, and have made what seems to them to be an intelligent gamble to “go bare” and spend the money on other things. Others not so young may be scrimping on health coverage in order to make their car payments, or to afford the suddenly more expensive jumbo mortgage payments on their homes, or cover their installment debt and energy bills. These data could indicate that worsening family cash flow is changing how the health benefit is viewed. The fact that relatively well-off households are having trouble remaining covered is deeply disturbing. It would be helpful to know more.

The average US household presently spends about 6% of its disposable household income on healthcare; the above average income household spends much less. In 2005, Americans spent about $250 billion out of pocket on health services and had another $190 billion taken out of their paychecks for health insurance premiums. In 2005, we spent a comparable amount, about $440 billion, on Christmas presents and about $470 billion on restaurants and fast food. How important is health coverage for middle and upper middle class households in their mix of spending priorities? However stressed financially, these families are not among the hundred neediest cases. …Is it important enough to merit public subsidy?”

…Aging Boomers are a surprisingly large part of the uninsured population. Almost one quarter of the 47 million uninsured are between the ages of 45 and 64. Despite the large reservoir of public sympathy for “the kids”, this older group of uninsured people may be the most expensive and scariest subpopulation because they are aging into the region of expensive chronic illnesses. Their emergency room visits are far more likely to be of the $25,000 variety and lead to hospital admissions. (A surprising 541,000 thousand people over age 65 lack health insurance, despite the smug assumption that we’ve achieved universal coverage for the elderly).

This older group of uninsured is bewilderingly diverse. It comprises homeless people, people who are widowed and divorced, laid off factory workers and computer programmers, free-agent knowledge workers, early retirees and those normal retirees whose companies either dropped retiree health coverage or went broke. (The disabled people in this age band are, of course, eligible for Medicare, though many do not enroll).

Mandating that these folks buy their own health insurance coverage, as “individual mandate” health policies such as Massachusetts’ require, poses three practical problems: the limited number of health insurers that will offer coverage to high-risk, older people; their pre-existing medical conditions (which are increasingly numerous as one ages); and the cost, which can easily exceed $2500 a month (if coverage is available at all). Even families with $120,000-a-year incomes would struggle to pay that type of premium out of pocket. For families at or below the median income of $48,000, realistically, it’s going to be impossible without public subsidy.

This is one reason why Massachusetts’ supposedly universal health plan exempted 60,000 people who could not afford even a “stripped-down” benefit. How many more “high-risk/high-need” uninsured people could have afforded Massachusetts’ health coverage if the state had seriously addressed its expensive health insurance mandates (requiring insurers operating in the state to cover chiropractors, in vitro fertilization, and breast reconstruction after cancer surgery, etc.) will be left to a future generation of doctoral students in health policy.” [ reference]
Turing to personal responsibility. People who abuse drugs or alcohol start do so for many reasons--often due to psychological problems, bad living environments, genetic predispositions, family problems, marketing & advertising influences, peer pressure, our society’s worship of short-term hedonism and self-indulgence (conspicuous consumption that drives our form of capitalism), and other such factors related to human frailties. And these folks tend to start down that negative path when quite young and more susceptible. A similar case can be made for smokers and even obese people. This doesn’t “excuse them” for their poor decisions, but it does explain why humans sometimes act foolishly. That is, there's a heck of a lot more to it than can be attributed simply to “personal choice,” like choosing a Coke over Pepsi (or visa versa). What we should be doing is working to change the things in our culture that precipitates such self-destructive behaviors, providing more effective psychological and rehabilitative services, investing more in preventive care and ways to motivate adherence to healthy lifestyles, etc. I find it rather heartless to say: “Too bad…it’s your fault you’re sick and can’t afford excellent healthcare…we don’t care why…but since you can’t afford it, you don’t deserve the same level of care that I do!”

Now, I'm not dismissing the claim that there may be some "deadbeats" out there who are psychologically stable and able to work, but wish to live in poverty just to get free medical care and be able to sleep all day, even though their health is more likely to be worse than others and they must do without the pleasures money can buy. But since 80% of our healthcare costs are for 20% of the population (i.e., old people near end of life and folks with certain chronic conditions), I don't think the deadbeats account for much of the utilization, even though you can certainly make a case that they are "playing the system" and ought to be required to pay back any publicly funded care they receive.

And here's a related conversation I had with a second individual.

Person 2 wrote:
Any solution to the multiple facets of the healthcare problem MUST consider human nature which is that if people do not have direct control over paying for services with real money out of their pockets, they will not consider the costs. No different from anything we purchase.

The start of health care insurance out of World War 2 wage and price freezes has caused us to get to this point. Most people consider health care as something for which insurance pays. They do not look at buying food, cars, homes, rent or mortgages, vacations, clothes, college tuition, etc. as something that which some kind of insurance pays. When the money comes from the person directly, they are more involved with getting as much quality for as low a cost as possible. Health care will eventually have to go back to the status of anything else we buy.

Catastrophic health care insurance could be purchased or offered to people based on income or assets. Normal market forces would keep costs reasonable and people would have the direct incentive to care for their own health--exercise, proper diet, weight control etc., for fear of spending their own money. Any other supposed solutions will keep the problem and make it worse over time with poorer care and higher costs.
I Replied:

I agree that people should consider cost-actually, cost-effectiveness (i.e., cost AND quality). This means they must have the knowledge and tools to determine when care is needed and what kind of treatment is most cost-effective, as well as to self-manage chronic conditions. Furthermore, they must be motivated to stay as healthy as possible, be able to afford the care they need, and have access to such care when it's needed. For many reasons, this is not the case today, so my point is that each of the causes should be addressed and remedied. For example:
  • Before a person can go to a cost-effective provider, he has to know where to find one, and that information doesn't exist!
  • For people to self-manage chronic conditions, which can be quite complicated and require multiple medications and lifestyle changes, many need to be educated, counseled to change maladaptive beliefs and emotions, and assisted in other ways, as well as have the resources (money, transportation, access to specialists, etc.) to carry out their care plans effectively.
  • We have to develop better ways to educate, motivate and enable people to take better care of themselves, despite the weaknesses of human nature (this is something my company is focusing on). Unfortunately, this is made more difficult by our culture, which makes some people wealthy by promoting poor eating habits (e.g., corn fructose excesses, hormones in animals, pesticides, etc., as well as making healthy organic foods very expensive), laziness (couch potatoes), excessive drinking of alcohol, tobacco use, etc.
  • We have to change the way we pay providers, from pay for volume to pay for delivery of high-value care.
  • We have to invest in better health IT systems for providers and consumers.
So, until that happens, healthcare is NOT like buying anything else, and thus market forces alone aren't the answer.

Providing catastrophic health care insurance to all based on ability to pay is a reasonable thing to do and wouldn't be overly expensive, but it fails to address the problems above and thus will not slow down spiraling healthcare costs or poor quality. The commercial insurance companies offer a choice of benefit packages with calendar year deductibles between $500 and $10,000, along with cost-sharing in which the covered individual pays anywhere from 20% to 50% of the cost of a service, as well as a lifetime maximum (of $1-3 million dollars). Under catastrophic health insurance plans, you tend to pay out-of-pocket for doctor's visits and prescription drugs, but major hospital and medical expenses above a certain deductible are covered. Most catastrophic health insurance plans cover hospital stays, surgery, intensive care, diagnostic, X-ray and lab tests, but not other services, like doctor's visits, preventive care, dental, vision, maternity care, prescription drugs, and mental health visits. And if you have certain pre-existing conditions, you often won't be eligible for a catastrophic health plan (or have a long waiting period). Examples of such conditions are AIDS, diabetes, emphysema, heart disease, multiple sclerosis, schizophrenia, and many more (see this link).

The problem with having only catastrophic coverage only, rather than comprehensive coverage, is that very high deductibles plus co-pays can be devastating to lower income folks, and many aspects of essential care are not covered, which means people will become more ill and thus require more costly care, and the uninsured will continue to crowd emergency rooms for care that could have been provided much less expensively in a doc's office.


Your comments are welcomed.

In my next post in this series, I'll discuss how the Whole-Person Integrated Care solution.

Monday, November 19, 2007

Patient-Centered Life-Cycle (PCLC) Value Chain--Process Reform: Pay for Value

Continuing the series on the PCLC Value Chain strategy [click here for the first post in the series], this post focuses on a third process in need of reform: The transformation from "pay for performance" to a "pay for value" model that rewards providers who deliver high-value to patients/consumers. Being a complex and controversial issue, this post is lengthy, but hopefully insightful.

Defining Pay for Performance

Today's Pay-for-Performance (P4P) model uses "quality" measures (metrics)--devised by insurers, government and big healthcare institutions--to judge the performance of providers (hospitals and clinicians) and pay them based on their performance. In the P4P process, monetary rewards are given to providers who follow specific evidence-based guidelines for particular types of patients and, for some conditions, who achieve certain results in patient health and well-being. And recently, the Centers for Medicare and Medicaid Services (CMS) decided to add a "stick" to the P4P "carrot," by announcing that they will cease paying for care made necessary by "preventable complications;" that is, they won't pay for certain conditions caused by medical errors or improper care--conditions that could have reasonably been avoided.

Thus, reforming healthcare via P4P "…rests on the following three principles: payers [insurers and CMS] should pay more for the treatment of conditions that require more resources and that the provider could not reasonably have prevented; they should pay more when evidence-based or consensus-based best practices are followed; and they should pay less or not at all for low-quality care. Naturally, the last will be the most controversial."[1]

While such an incentive model may affect clinician behavior [2][3], and although the number of P4P programs is growing, critics say that they increase providers' administrative burden while giving no clear evidence money will be saved or quality will be improved.[3a] Furthermore, using compliance to evidence-based guidelines as the measure of performance can be problematic for numerous reasons.[4][5]
These issues and others pose significant challenges to any P4P program.

P4P Challenges

P4P programs must deal with the following challenges:
  • A provider's practice may be too small to permit valid analysis of the performance data.
  • Patient population differences--in terms of health status, insurance coverage, etc.--may mean that a specific practice guideline may work well for certain patients in certain situations, but not work for others.
  • Even though providers may adhere to practice guidelines tied to P4P, they may not comply with guidelines for which there is no performance assessment and financial incentive.
  • Many specialties lack evidence-based guidelines, and the guidelines that exist may not be valid.
  • Performance metrics must be adequately "risk-adjusted" for patients with difficult to treat problems. These risk-adjustments alter the criteria for determining "successful" care by accounting for differences in the severity of patients' conditions treated by different providers, thereby enabling fair comparisons. It can be very difficult, however, to establish valid are risk-adjustment equations.
  • When a guideline is not clinically appropriate for a particular patient, a provider should not be penalized for deviating from it with minimal, but appropriate, documentation.
  • P4P programs may end up costing the system more in the long run.
  • If providers chase different P4P criteria developed by different payers, it can lead to duplication of services and unnecessary testing.
  • Different insurer-based P4P programs often measure performance differently, which results in unnecessary administrative burdens, as well as failing to adjust for differences in patients' conditions, economics and demographics.[5a]
  • Since quality metrics are largely arbitrary, different healthcare plans tend to have different performance indicators for the same disease, which convolutes the process.
  • P4P could simply redirect money toward wealthier areas where patients are more likely to follow doctors' orders.
  • Patient satisfaction surveys can be unreliable.
  • When a patient is treated by multiple clinicians, it can be unclear who is responsible if a recommended guideline isn't followed.
  • A patient's ability and willingness to adhere to self-maintenance instructions often affect outcomes, thus impacts provider performance measures.
One way P4P programs attempt to deal with such challenges is by establishing useful performance measurement standards.

Performance Measurement Standards

At least three standards are related to measuring clinician and hospital performance:
  1. Process compliance standards
  2. Care outcome standards
  3. Care value standards.

Process Compliance Standards

Process compliance standards measure the "quality" of providers' performance based on whether they follow recommended guidelines reflecting preferred care processes. For example, typical P4P programs reward providers who perform certain predefined procedures (processes), such as doing a Hemoglobin A1c test a certain number of times each year for patients with diabetes. These standards measure the degree of compliance to such established procedures.

Some of the problems with P4P are exemplified by research showing that following recommended procedural guidelines for hospitalized patients with heart attacks--e.g., give patients aspirin and beta blockers at admission and discharge--doesn't mean better outcomes as measured by 30-day mortality rates.[6] So, after 30 days of an attack, the research shows that the health status of a patient with actuate myocardial infarction is influenced only slightly by whether or not his/her provider followed the guidelines. This is because outcomes research is still an infant science, which makes P4P premature, at best. In this case, and in many others, measures of performance are too crude (i.e., limited whether the patient died within 30 days, but ignores what happens after that time) and too narrow (i.e., aspirin, beta blockers and a few or recommended interventions are inadequate to address all of a patient's needs and problems). So, it appears that care quality is not necessarily related to guideline compliance.

Let's examine this issue a bit more deeply. Adhering to existing process guidelines are, no doubt, helpful for many patients. But numerous other things not appearing in a process guideline, and thus not used to measure the quality of care, may be as important (and possibly more important) to improving a patient's health and well-being.

For example, important processes lacking in today's P4P guidelines, and not being considered as quality metrics, include:
  • Educating a patient suffering from congestive heart failure about the pros and cons of a heart operation
  • Counseling and coaching the patient to make critical lifestyle changes (e.g., good eating and exercise) and to manage stress more effectively
  • Implementing cost-effective complementary and alternative interventions
  • Using computerized diagnostic aids, clinical pathways, continuity of care records, and electronic medical/health records.
Other important processes affecting care quality that P4P programs fail to measure include:
  • How well a patient's plan of care maps to his/her primary diagnosis and comorbidities (the presence of one or more disorders/diseases that co-exist with a patient's primary disorder/disease)
  • Whether a plan of care is based on a general guideline, or whether it is personalized, i.e., tailored to each patient's unique situation by taking into account patient-specific biomedical, psychological, genetic, cultural, and historical factors, as well as one's personal preferences
  • How well care is coordinated among a patient's providers after discharge from the hospital
  • The quality of care delivered in both inpatient and outpatient settings (e.g., whether there were errors, omissions, infections, etc.)
  • The patient's ability and willingness to comply with self-management care plans to prevent complications or worsening a condition
  • The appropriateness of the self-management care plans, as well as patient education and compliance counseling/coaching.

Care Outcomes Standards

Unlike process compliance standards, care outcomes standards do not focus on whether specific procedures were followed. Instead, they measure the effectiveness of whatever treatments were delivered, and whether clinical goals are achieved for patients with particular conditions. For example, a care outcome standard for diabetics is blood glucose control defined as a Hemoglobin A1c test target goal of less than 7.0%. This means care outcomes data should measure more than mortality rates (patient deaths); they should also measure a patient's physical and psychological signs and symptoms--including patient complaints, clinician observations, vital signs, lab test results, imaging studies, and quality of life (such as mental health, mobility, social functioning, role limitations, vitality, etc.).

Interpreting care outcomes data ought to take into account factors that may influence the care results, such as:
  • Comorbidities and their effect on the patient
  • Allergies and other things that can cause adverse reactions/side-effects
  • Environment conditions (at home, in the workplace, etc.)
  • Treatment history
  • Family history
  • Genetic markers
  • Patient's attitudes and preferences
  • Patient's emotional state
  • Patient's psychosocial situation (e.g., degree of family support).
Understanding how to use care outcomes to measure quality, therefore, is a complex process that requires a wealth of diverse health data. Unfortunately, existing P4P programs do not use comprehensive care outcomes to assess the quality of care. Instead of obtaining and analyzing detailed lots of clinical data (signs and symptoms), they typically rely on insurance claims (administrative) data.

Claims data provide some useful measures of quality, including mortality rates, complications; and claims data provide useful information about cost. These data, however, provide grossly inadequate metrics for improving care quality and efficiency. This is because claims data do not include information necessary to determine, for example, how much a patient's signs and symptoms improved after treatment, if errors were made, if lower cost treatments of equal or greater effectiveness could have been used, if the patient was educated adequately in self-care and complied with the prescribed plan of care, and if coexisting conditions affected results. Without such care outcomes data, it isn't possible to evaluate a provider's performance accurately nor gain the knowledge needed to improve healthcare effectiveness and efficiency. So, instead of using claims data alone to measure care outcomes, they should be augmented with detailed clinical data.
Measuring process compliance, and balancing clinical and claims outcomes data are essential to assessing care quality, but rewarding cost-effectiveness require care value standards.

Care Value Standards

In contrast to care process and outcomes standards, care value standards combine process and outcome quality metrics with economic metrics to measure cost-effectiveness, which defines the value of care.

If our healthcare system was rational and guided by wisdom, a top priority of healthcare professionals and patients/consumers would be to maximize care quality and efficiency (i.e., value) by:
  • Gaining valid knowledge about healthy living, the causes and diagnosis of physical and mental health problems, and the treatments delivering the best results most cost-effectively to each patient.
  • Understanding how to use this knowledge to maximize value to the patient/consumer by increasing care effectiveness and efficiency, as well as improving prevention and self-maintenance of chronic diseases.
  • Continuously evolving this knowledge and using it to improve care quality and lower costs continually.
For significant improvement in healthcare delivery, useful and reliable care value standards must be established for every health risk factor, illness/condition, and healthcare discipline/field; and these standards must be used to measure and reward high-value performance. Unfortunately, today's P4P programs fail to do this since, in part, measuring care quality is so difficult.

Pitfalls of Care Quality Measurement

Following are potential pitfalls of care quality measurement:
  • Today's diagnostic systems often fail to point to the highest quality treatment options, which means we often don't know the what care interventions are likely to produce the best results.[7]
  • Few guideline standards are specific enough to account for individual differences in patient with the same diagnosis. For example, a recent study found that a moderately high total cholesterol level is associated with higher survival in certain patients with heart failure.[8] Such specificity is needed for high quality personalized care.
  • Constantly evaluating and revising evidence-based guidelines based on new knowledge is very difficult. But if they do not continually evolve, the guidelines do not promote quality since they are just "a record of the past, and little more-they should have an expiration date."[9]
  • According to HHS Secretary Mike Leavitt, "Medical associations and others have begun the work of developing quality standards and cost measurement, but we have many years of work ahead of us to achieve the wide-ranging and meaningful quality standards we need."[10]
  • No mater what quality measures are used, there are complex issues to be resolved, such as:
    • At what point is there sufficient confidence in an evidence-based guideline that there is no longer any need to spend time or money on the continuous evaluation of its reliable and validity?
    • When is a definition of quality too narrow, e.g., by focusing on cost or symptom reduction, but not considering prevention, recurrence, coordination and continuity of care, or the patient-physician relationship?
    • How do you measure quality when resources are scarce and optimal care for the community may require less than "the best" care for its individual members (e.g., delegating office nurses to perform certain activities that physicians used to do)?
    • What is the best way to measure quality if outcomes are more strongly affected by patient compliance than by physician orders? This may occur, for example, if certain providers have personalities that trigger greater patient compliance, and visa versa.
    • Is it poor quality care if a provider follows the recommended practice guideline, but the patient is atypical and responds poorly? [11]
    • Use of claims (administrative) data to measure care quality is grossly inadequate for many reasons.[12]
  • As discussed earlier, assessing care quality using process data may not be valid since they do not necessarily reflect care outcomes.[13]
  • One thorny issue is how to avoid political and ideological biases when determining what evidence to use as the basis for establishing the guidelines, since quality care is unlikely to be achieved unless treatments are based on objective science.[14]
  • Many areas of healthcare lack care process standards and/or quality measures. That is, different healthcare disciplines and specialties require different types of data to evaluate quality. For example, it's foolish to measure the quality of mental healthcare services with data appropriate for evaluating cardiologists' performance; and the same is true for a podiatrist, dentist, chiropractor, etc.-each need different measures for determining quality, but they are often lacking.[15]
We must deal with these challenges and pitfalls before P4P incentives will lead to substantial care quality improvements. But even if P4P results in more effective diagnostic and treatment procedures, this increased higher quality care fails to address the problem of high costs due to inefficiency, which includes wasteful over-testing, over-treating, and delivery of more expensive care when less costly alternatives are just a effective, as well as inadequate focus on wellness/preventive care. Only the transformation to "Pay for Value" (P4V)--in which the most cost-effective (high-value) care is rewarded--will make healthcare more affordable and available.

Transformation to Pay for Value

Unlike P4P, P4V focuses on the relationship between diagnosis, treatment, clinical outcomes and cost to increase care value through incentives for improving care quality and efficiency, i.e., cost-effectiveness. The transformation to P4V requires that we:
If we did this, we would have patient-specific evidence-based guidelines defining the most cost-effective care tailored to each patient's particular needs. We could then reward providers for rendering such high-value care. This is the essence of P4V.

Unfortunately, our country has not been moving in the P4V direction because we fail to:
  • Focus on supporting the kinds of research and information systems necessary for generating and using the kind of evidence-based guidelines providers and patients need to improve outcomes and control costs through greater quality and efficiencies
  • Reduce waste and expense by selecting and implementing the most cost-effective care options and prevention strategies.
This means that today's P4P programs are built on flimsy knowledge. In essence, we are pretending that we know (a) what each patient needs to remain well through prevention; (b) when ill, what each patient needs to get well with least risk and complications; and (c) how to deliver such care with the greatest efficiently and least cost.

Let's Stop Deceiving Ourselves

Pretending we know what high-value (cost-effective) care is and how to deliver it--as we flounder in a knowledge gap dominated by ignorance and uncertainty and inadequate health information technologies--is a dangerous form of self-deception. We are deceiving ourselves into believing that rewarding providers via P4P for following current day best practice guidelines is going to increase the quality and reduce the cost of care when (a) research shows that today's guidelines are neither personalized nor focused on cost-effectiveness and (b) following the guidelines do not necessarily result in better outcomes, as discussed earlier.

So, instead of pretending, we should be obtaining and using the knowledge we need about care value by investing more in clinical research (in both lab and field) and advanced information systems that provide next-generation decision-support, collaboration, and continuity of care capabilities. This means we should be focusing on transforming our current healthcare system to a value-based system that:
  • Pays for the research, collaboration and information systems needed to establish, evolve, disseminate and use high-value, evidence-based guidelines that are tailored to each patient's particular needs.
  • Offers financial incentives to the providers who engage in this knowledge-building and utilization process to deliver high-value care, rather than simply rewarding those who follow today's inadequate guidelines.
Once we've established valid and reliable patient-specific best practice guidelines--which take into account both quality and cost--then we are ready to make the transformation to pay for value (P4V). In the mean time, we ought not postpone P4P initiatives, as long as:
  • Clinicians who chose not to follow standardized guidelines for particular patients will also receive the reward if they have a good reason for doing things differently
  • Ample clinical and financial outcomes data are collected to determine the effect of following general guidelines with particular patient types, so we are able to make them more personalized over time
  • Built into the P4P methodology is an increased focus on rewarding clinicians who get good results at a good price, and decreased focus on simply following general processes
  • Money spent in these early P4P initiatives do not restrict spending on research aimed at developing personalized guidelines and better decision tools
  • There is an explicit strategy to move toward giving P4V rewards to multidisciplinary teams of clinicians who are involved in treating the same patient, as opposed to each individual clinician, in order to promote better continuity of care.
In other words, the transformation from today's P4P initiatives to P4V should be based on a clear strategy to:
  • Improve/evolve current evidence-based guidelines to be ever more personalized
  • Make financial rewards increasingly based on clinical outcomes data reflecting high-value care delivery
  • Enhance collaborative efforts within teams of clinicians promoting better continuity of care.
In addition, P4V should include "shared decision making" augmented by patient decision aids for achieving informed patient choice. This strategy would promote "a new standard of practice for defining medical necessity for many discretionary treatments based on informed patient choice … [which is beneficial since] informed patients appear to demand less surgery than the amount now being performed … and the risk for serious medical error occasioned by providing an unwanted therapy is greatly diminished."[16]

Failure to do these things can do more harm than good by making us complacent in the belief that we are doing enough, whereas in reality, these early P4P models do relatively little when you realize what ought to be done in the long term to increase care value!

Bridges to Excellence

There are potentially useful P4P models being offered, which can foster the transformation to P4V. One such model, named Prometheus, is being proposed by the Bridges to Excellence organization, a non-profit group of employers, physicians, health plans and patients working to create significant leaps in the quality of healthcare. It focuses on a payment system that uses (a) "evidence-based case rates" that determine how much to pay providers based on the cost of the resources required to deliver care according to evidence-based practice guideline, and (b) a comprehensive scorecard of quality to pay more money to providers who consistently follow certain practice guideline processes, demonstrate good clinical outcomes, receive high patient satisfaction ratings, and operate cost-efficiently.[17]

In my next post in this series, I discuss the Whole-Person Integrated-Care solution.


[1] Rosenthal, M.B. (2007). Nonpayment for Performance? Medicare's New Reimbursement Rule. New England Journal of Medicine; 357(16):1573-5.
[2] Ibid.
[3] Rosenthal, M.B., et al. (October 2005) Early Experience with Pay-for-Performance: From Concept to Practice. Journal of the American Medical Association, 294 (14):1788-93.
[3a] Modern Physician Online (Sep 17, 2007). P4P programs' value questioned despite growth.

[4] Garber, A.M. (2005). Evidence-Based Guidelines As a Foundation For Performance Incentives. Health Affairs, 24, (1): 174-179 Available at
[5] Cannon, M.F. (2006). Pay-for-Performance: Is Medicare a Good Candidate? Cato Institute Working Paper. Available at
[5a] Minneapolis/St. Paul Business Journal (Nov 19, 2007).
[6] Bradley, E.H., et al. (2006). Hospital Quality for Acute Myocardial Infarction: Correlation Among Process Measures and Relationship With Short-term Mortality JAMA;296:72-78. Available at
[7] Current Diagnostic Codes are Inadequate - WellnessWiki
[8] Reuters (Sep 20, 2006). Elevated cholesterol may benefit failing hearts.
[9] Gawande, A (2004). The Bell Curve. The New Yorker.
[10] Bush's Value-Driven Health Care Plan Gains Steam as More Employers Step Up (May 10, 2007)
[11] Donabedian, A. (2005). Evaluating the Quality of Medical Care. The Milbank Quarterly 83, 691-729.
[12] Use of claims data is inadequate - WellnessWiki
[13] HealthDay (July 5, 2006). Hospital Ratings Don't Fully Reflect Patient Outcomes.
[14] Healy, B. (Sep. 2006).Who Says What's Best? U.S. News and World Report.
[15] Need for specialy measures - WellnessWiki
[16] Wennberg, J.E., et al. (2007). Extending the P4P Agenda, Part 1: How Medicare Can Improve Patient Decision Making and Reduce Unnecessary Care. Health Affairs; 26(6):1564-74.
[17] Bridges To Excellence (2006). Prometheus White Paper - Paying for Excellence. Available at

Saturday, November 10, 2007

Patient-Centered Life-Cycle (PCLC) Value Chain--Process Reform: Value-Based Competition

Continuing the series on the PCLC Value Chain strategy [click here for the first post in the series], this post focuses on a second clinical process in need of reform, that is, the transformation to "value-based competition."

Current Competition Models are Misdirected

Healthcare market forces in America over the past decade have transitioned from managed care and capitation to integrated delivery (integration of health insurance with provider systems) to a vision in which providers compete to improve care quality and control costs, and consumers choose the best providers.[1]

There is now debate on whether competition should be redirected by:
  • Eliminating provider networks and encouraging informed, financially responsible consumers to choose the best provider for each condition
  • Encouraging integrated delivery systems with incentives for teams of professionals to provide coordinated, efficient, evidence-based care, supported by state-of-the-art information technology
  • Basing selection of particular healthcare services on local population needs and core competencies of the providers.
Why redirect competition? Because there's ample evidence that competition in our healthcare system today is misdirected, for example:

  • Instead of competing on the ability to prevent, diagnose and treatment healthcare problems … competition today is among health plans, hospitals, and networks
  • Instead of competing to improve healthcare value - the level of care quality per dollar spent over time … competition today focuses on cost reduction by transferring costs to someone else without reducing total costs
  • Instead of competing to create value at the level of health problems by developing expertise, reducing errors, increasing efficiency, and improving outcomes … competition today focuses on signing up healthy consumers, discounting prices to large payers and groups, consolidating for increased bargaining power, and cost shifting
  • Instead of competing at the regional and national level … competition today is local
  • Instead of competing based on distinctiveness by offering services and products creating unique value … competition today focuses on building full-line services, forming closed networks, reducing rivalry by consolidating with others, and matching competitors
  • Instead of focusing on obtaining and sharing information about providers and treatment alternatives for specific conditions … most information shared today is about health plans and consumer satisfaction surveys
  • Instead of helping consumers find the best care value for specific conditions, simplifying billing and administrative processes, paying bills promptly … payers today attempt to attract healthy subscribers, raise rate for people with health problems, restrict treatments and out-of-network services, and shift costs to providers and patients
  • Instead of focusing on developing areas of excellence and expertise by engaging in quality improvement programs and use evidence-based practice guidelines to enhance care effectiveness and efficiency, and to eradicate mistakes … providers today tend to offer every service, often below prevailing medical standards, refer patients with their own network if at all, spend less time with patients and discharge them quickly, and practice defensive medicine.[2]

Redirecting Competition

Redirecting competition in this way focuses on delivering better outcomes and reducing costs. Methods offered as ingredients for changing the current system of competition include:
  • Eliminate restrictions to competition and choice. Remove preapprovals for treatment or referrals, as well as network restrictions; enforce antitrust rules against collusion, excessive concentration, and unfair practices; and make co-payments and medical savings accounts more meaningful by applying high deductibles to give consumers incentives to seek high-value care, or else make people cost-conscious of their insurance premium and have clearly defined standardized benefit packages based on a community rated risk pool basis that allows unambiguous comparisons between different health plans.
  • Make useful information more accessible. Collect and widely disseminate appropriate information about treatments and alternatives; make immediately available information about providers' experience in treating particular health problems; develop, continually enhance risk-adjusted outcomes data; standardize some information to enable national comparisons.
  • Transparent pricing. Each provider sets a single price for each treatment/procedure, while different providers set different prices; price estimates are made available in advance to enable comparisons.
  • Simplified billing. Use one bill per hospitalization or period of chronic care; payers have legal responsibility for medical bills of paid-up subscribers.
  • Nondiscriminatory insurance. Eliminate re-underwriting; use assigned risk pools for those needing them; require health plan coverage that would create equity and value throughout the system.
  • Better treatment coverage. Use a national list of minimum required coverage; additional coverage results from competition, not litigation.
  • Fewer lawsuits. Provide more information that disclose risks and inform consumers of their choices; limit lawsuits to obsolete treatments and carelessness.[3]

New Care Delivery Models

There several care delivery models care, which focus on the establishment of collaborative, multidisciplinary teams of providers who deliver more coordinated care to their patients. These models include:
  • Integrated care. "Integrated delivery systems" (IDSs) are built on the core of a large, multispecialty medical group practice, often with links to hospitals, labs, pharmacies, and other facilities, and often with 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, and Geisinger Health System). These systems execute processes to ensure the provision of appropriate, evidence-based care; offer the full spectrum of care coordination; use of comprehensive, shared patient records; and are able to improve efficiency on a large scale. Unlike a recommendation above, IDSs by their very nature restrict access to networks of providers.[4]
  • Integrated care versus selective diversification. Unlike "integrated care," the strategy of "selective diversification" focuses on selecting the particular healthcare services to offer based on local population needs and core competencies of the providers. Whereas integrated care can work well for organizations with mechanisms for governance that balances the authority of the system with the autonomy of key service units, selective diversification is more appropriate for organizations in which facility-specific local boards retain ultimate fiduciary authority. Under the selective diversification model, hospitals compete not for the entire clinical continuum, but for each service separately, which takes advantage of their local expertise, market potential and financial resources.[5]

Value-Based Competition

The cornerstone of value-based competition is for providers who demonstrate better results to gain competitive advantage for higher profits/income. That is, clinicians whose patients remain healthier longer, recover more quickly, and avoid complications--and who achieve these positive outcomes at a least cost--would receive more referrals, a higher payment rate, and/or other financial rewards.

Let me first define what I mean by "value." Value is measured by dividing the quality of care delivered by its cost, i.e., V = Q / C:
  • Q (Quality) is defined as the degree to which care is delivered safely, effectively and equitably. The care may include conventional and alternative interventions for treating illness, as well as wellness intervention for prevention and health optimization. Quality can be measured based process compliance standards, clinical outcomes standards, or both.
  • C (Cost) is defined as the degree to which the care is delivered efficiently and economically.
  • V (Value), therefore, can be defined as cost-effectiveness ("bang for the buck").
So, in this sense, providers delivering the most cost-effective care are producing the greatest value for the consumer, and that value ought to be recognized and rewarded.

There is already some movement in this direction. For example:

"Seeing low fees for family doctors as a weak link in the nation's health care system, some big employers and health insurers are seeking new ways to pay doctors to reward high-quality medical care. An influential medical standards group plans to present a new model today [11/7/07] for helping employers and insurers to identify the best primary care doctors and to steer patients their way. Those doctors, in turn, would be paid for more services than are currently reimbursed under typical health plan payments for office visits.
The idea is to encourage doctors to meet with patients for more than a few minutes during an office visit and to also compensate them, or nurse coordinators, for communicating with patients by phone and e-mail outside office hours. Doctors would also be compensated for helping patients manage chronic conditions - like reminding diabetic people to take their insulin-- and would be encouraged to transmit prescriptions electronically.
The group proposing this model, the National Committee for Quality Assurance, a nonprofit organization focused on health care, plans to present its plan today in Washington at a big meeting of doctors, insurers and employers that provide health benefits."[6]
A related model promoting value-based competition on results involves having providers form "integrated practice units" (IPUs) that pull together the talent and facilities required to deliver coordinated care over the entire care cycle (i.e., each episode of care) for each patient. These IPUs would include all providers treating a patient and all services delivered by these teams, from diagnosis to treatment to rehabilitation and long term management, and even prevention. The IPUs focus on particular health condition for which they have expertise enabling them to demonstrate superb clinical results and efficiencies. Both risk-adjusted outcomes and costs would be measured over the full cycle of care; not for discrete interventions or procedures. Teams who have better outcomes at lower costs, i.e., deliver greater value, have a competitive advantage and receive more referrals, as well as financial incentives. These comparisons would be made at regional, national, and even world level, not only locally within their own healthcare system; patients would be given incentives to travel to the best providers. Successful IPUs would, therefore, gain ever greater experience treating particular conditions and would develop ever greater expertise and efficiencies, thereby continually improving the quality and lowering the cost of care delivered.

While coordinating care within multidisciplinary teams and rewarding cost-effective care are critical to improving our healthcare system, the IPU model has several shortcomings, including:

  • It is very difficult to categorize each patient's problems neatly into a finite set of standard medical conditions since they often have multiple (comorbid) conditions simultaneously requiring different treatments (e.g., Medicare patients are reported to suffer from five different chronic diseases at once). Thus, there is often need to deliver care across multiple conditions, which means such a complex patient cannot rely on a single IPU specializing on only one of his/her conditions. And it is unrealistic to expect complex patients to spend lots of time traveling to different IPUs, especially in rural areas where they may be few and far between.
  • It is very difficult to define and capture valid and reliable health outcomes data for rewarding good results, especially since (a) it could take many years for certain conditions to be resolved, which makes value-based payment a problem; (b) the actions or inactions of the patients themselves influence the outcomes, which means that both prevention of illness and compliance to treatment plans are both important factors to consider; and (c) there is insufficient use of health information technologies, along with the fact that most current systems do not handle comprehensive clinical outcomes data.
  • Specialists who are reputed to be "the best" in their field already have more patients than they can handle. This means referring more patients to them is hardly a reward since the have to turn them away.
For reasons such as these, I suggest that large, multi-specialty group practices (i.e., the integrated delivery and selective diversification systems described above) are better able than IPUs to provide high-value coordinated care to the average patients with multiple problems. And they should include patient-centered medical homes, which I discussed in my previous post.

Furthermore, we must focus on defining better measures of care value, which should go well beyond the quality metrics used today that are predominantly "process measures," not measures of clinical outcome (the results of care). For more about this issue, see this post.

In my next post, I examine how to transform current "pay for performance" into "pay for value" models that reward providers and insurers who offer high-value to patients/consumers.
[1] Ginsburg, P. (2005). Competition In Health Care: Its Evolution Over The Past Decade, Health Affairs, 24, no. 6 (2005): 1512-1522. Available at
[2] Porter, M. E. and Teisberg, E. O. (Jun 1, 2004). Redefining Competition in Health Care. Harvard Business Online. Available at
[3] Ibid
[4] Enthoven, A.C. & Tollen, L.A. (2005). Competition In Health Care: It Takes Systems to Pursue Quality and Efficiency. Health Affairs. Available at
[5] Robinson, J.C. & Dratler, S. (2006). Corporate Structure and Capital Strategy at Catholic HealthcareWest: Balancing mission and margin in the capital-intensive hospital industry. Health Affairs; 25(1), 134-147. Available at
[6] Freudenheim, M. (Nov. 7, 2007). A Model for Health Care That Pays for Quality. New York Times.Available at
[7] Porter, M.E. & Tiesberg, E.O. (2006). Redefining Health Care: Creating Value-Based Competition on Results. Harvard Business School Press.

Saturday, November 03, 2007

Patient-Centered Life-Cycle (PCLC) Value Chain--Process Reform: Patient-Centered Care

In my previous posts, I've discussed the benefit of integrating the three macro processes of the PCLC Value Chain strategy: emergency-care, sick-care & well-care. In my next series of posts, I'm going to focus on our healthcare system's problematic clinical and financial processes. I'll be examining ways to reform these processes so they enable the PCLC Value Chain strategy to succeed in increasing increase healthcare effectiveness, efficiency and access. I begin with the transformation to "patient-centered" care.

Patient-Centered Care

To define patient-centered care, let's start by contrasting it with the kind of non-patient-centered care we have today. We currently have a fragmented healthcare system in which:
  • Plans of care are typically one-size-fits-all, which means clinical guidelines are rarely tailored to a patient's particular needs an preferences
  • The vast majority of practitioners use paper-based patient records or electronic records that are not interoperable, which means sharing patient data between providers is inefficient at best and non-existent at worst, resulting in poor coordination of care when multiple clinicians treat the same patient
  • Collaboration between providers, and between providers and researchers, is weak, which hampers knowledge growth and exchange
  • Patient education tends to be insufficient and compliance to plans of care is low
  • Transparency of cost and quality is grossly inadequate
  • Profit is tied to quantity, not to efficiency and effectiveness.
In contrast, the patient-centered healthcare model I'm proposing focuses on prevention, delivery of cost-effective treatments that take into account patient preferences and unique needs, care coordination, and enhanced self-management of chronic conditions.
The following six core elements are identified most frequently in the literature as essential for patient-centered care:
  • Education and shared knowledge
  • Involvement of family and friends
  • Collaboration and team management
  • Sensitivity to nonmedical and spiritual dimensions of care
  • Respect for patient needs and preferences
  • Free flow and accessibility of information
…Seven key factors contribute to achieving patient-centered care at the organizational level are:
  • Leadership, at the level of the CEO and board of directors, sufficiently committed and engaged to unify and sustain the organization in a common mission.
  • A strategic vision clearly and constantly communicated to every member of the organization.
  • Involvement of patients and families at multiple levels, not only in the care process but as full participants in key committees throughout the organization.
  • Care for the caregivers through a supportive work environment that engages employees in all aspects of process design and treats them with the same dignity and respect that they are expected to show patients and families.
  • Systematic measurement and feedback to continuously monitor the impact of specific interventions and change strategies.
  • Quality of the built environment that provides a supportive and nurturing physical space and design for patients, families, and employees alike.
  • Supportive technology that engages patients and families directly in the process of care by facilitating information access and communication with their caregivers.
…Key strategies identified as necessary to overcome barriers and to help leverage widespread implementation of patient-centered care can be divided into the following two groups:
  • Organization Level. Strategies designed primarily to strengthen the capacity to achieve patient-centered care at the organization level include:

    • Leadership development and training
    • Internal rewards and incentives
    • Training in quality improvement
    • Practical tools derived from an expanded evidence base

  • System Level. Strategies aimed at changing external incentives in the health care system as a whole, to positively influence and reward organizations striving to achieve high levels of patient-centered care, include:

    • Public education and patient engagement
    • Public reporting of standardized patient-centered measures
    • Accreditation and certification requirements.[1]

    Patient-Centered Medical Home

    One implementation of patient-centered healthcare is the "advanced medical home"[2]--also called a "patient-centered medical home"--which is:
    ...a model of care that puts the needs of the patient first. The medical home is the base from which health care services are coordinated to provide the most effective and efficient care to the patient. This includes the use of health information technology, the coordination of specialty and inpatient care, providing preventive services through health promotion, disease management and prevention, health maintenance, behavioral health services, patient education, and diagnosis and treatment of acute and chronic illnesses...Each patient has an ongoing relationship with a personal physician trained to provide first contact, continuous and comprehensive care. The medical home is responsible for providing for all the patient's health care needs or taking responsibility for appropriately arranging care with other qualified professionals. The personal physician leads a team of individuals who collectively take responsibility for the ongoing care of patients...Quality and safety are the hallmarks of the medical home. Evidence based medicine, health information technology, and clinical decision support tools guide decision making to support patient care, performance measurement, patient education, and enhanced communication. Ensuring the coordination and comprehensive approach of the medical home model over time will improve the efficiency and effectiveness of the health care system and ultimately improve health outcomes.[3]
    The above definition describes the kind of highly functional patient-centered medical home that is most closely aligned with the PCLC Value Chain and of greatest benefit to patients. Unfortunately, few exist today. But if we "water down" the definition to mean little more than a regular doctor or source of primary care who (a) has information about patients' medical history, (b) can be contacted by phone during office hours, and (c) coordinates care--then more exist, though not nearly enough. While the benefits to patients are not as great with this less functional type medical home, it can still help improve outcomes and value to the patient; consider the following:
    Cross-national and U.S.-specific studies find an association between access to comprehensive primary care and both better health outcomes and lower medical costs. In light of such evidence, a movement has emerged to transform primary care practices into "medical homes" that provide an array of patient services in an efficient manner…[but] only about half of adults in all seven countries have medical homes. In each country, patients with medical homes reported more positive care experiences than those who did not, including more time spent with their doctors and greater involvement in care decisions.

    In the U.S., the uninsured were at high risk of missing such a connection to the health system: just 26 percent of uninsured adults under age 65 had a medical home, versus 53 percent of the insured.

    Those with a medical home were also much less likely to report medical errors, receive conflicting information from different doctors, or encounter coordination problems.

    "Achieving better care coordination will likely require designs that include a mix of formally integrated organizations, co-locating or sharing services, and connecting through information systems," the authors conclude. "Developing medical home approaches offers the potential to move toward higher performance."[4]
    The delivery of patient-centered care, including the extensive use highly functional medical homes, is therefore one systemic reform process that would bring value to the patient. In my next post, I discuss another: Value-Based Competition.


    [1] Shaller, D. (October 2007) Patient-Centered Care: What Does It Take?, The Commonwealth Fund, Volume 74. Available at
    [2] Available at
    Available at
    [4] C. Schoen
    , R. Osborn, M. M. Doty, M. Bishop, J. Peugh, and N. Murukutia, Toward Higher-Performance Health Systems: Adults' Health Care Experiences in Seven Countries, 2007, Health Affairs Web Exclusive October 31, 2007 26(6):w717–w734. Available at