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Value-Based Health Care Delivery:Creating an Action-Research Agenda
This presentation draws on Porter, Michael E. and Thomas H. Lee. “The Strategy that Will Fix Health Care,” Harvard Business Review, October 2013;Porter, Michael E. with Thomas H. Lee and Erika A. Pabo. “Redesigning Primary Care: A Strategic Vision to Improve Value by Organizing AroundPatients’ Needs,” Health Affairs, March 2013; Porter, Michael E. and Robert Kaplan. “How to Solve the Cost Crisis in Health Care,” Harvard BusinessReview, September 2011; Porter, Michael E. “What is Value in Health Care” and supplementary papers, New England Journal of Medicine, December2010; Porter, Michael E. “A Strategy for Health Care Reform—Toward a Value-Based System,” New England Journal of Medicine, June 2009; Porter,Michael E. and Elizabeth Olmsted Teisberg. Redefining Health Care: Creating Value-Based Competition on Results. (2006) Additional informationabout these ideas, as well as case studies, can be found at the Institute for Strategy and Competitiveness Redefining Health Care website athttp://www.hbs.edu/rhc/index.html. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by anymeans — electronic, mechanical, photocopying, recording, or otherwise — without the permission of Michael E. Porter and Elizabeth O.Teisberg.
Professor Michael E. PorterHarvard Business School
www.isc.hbs.edu
START
July 15, 2014
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
“Redefining Competition in Health Care” (HBR)
Timeline
32011.09.03 Comprehensive Deck Copyright © Michael Porter 2013
Competition in U.S. Health Care
• Competition to shift costs or capture greater revenue
• Competition to capture patients and restrict choice
• Competition to increase bargaining power to secure
discounts or price premiums
• Competition to exclude less healthy individuals
• Competition on the wrong things leads to a zero-sum competitionwith no or negative value
42011.09.03 Comprehensive Deck Copyright © Michael Porter 2013
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“Redefining Competition in Health Care” (HBR)
Timeline
Copyright © Michael Porter 20135
• Delivering high and improving value is the fundamental purpose of health care
• Value is the only goal that can unite the interests of all system participants
• Improving value is the only real solution versus further cost shifting, restricting services, or dramatically reducing the compensation of health care professionals
Solving the Health Care Problem
• The core issue in health care is value for patients
Value =Health outcomes that matter to patients
Costs of delivering the outcomes
Copyright © Michael Porter 20136
Creating a Value-Based Health Care Delivery SystemThe Strategic Agenda
1. Organize Care into Integrated Practice Units (IPUs) around Patient Medical Conditions
− For primary and preventive care, organize to serve distinct patient segments
2. Measure Outcomes and Costs for Every Patient
3. Move to Bundled Payments for Care Cycles
4. Integrate Care Delivery Systems
5. Expand Geographic Reach and Serve Populations
6. Build an Enabling Information Technology Platform
Copyright © Michael Porter 20137
Getting Unstuck
1Organize into
Integrated Practice Units (IPUs)
3Move to B
Payments Cycl
4Integrate Care
Delivery Systems
5Expand Geographic
Reach
6 Build an Integrated Information Technology Platform
1Organized Around
Specialties and Departments, with Private
Practice Physicians
2Measures Process Compliance and
Charges
3Fee-For-Service
Payments Based on Volume of Services
Delivered
4Each Hospital or
Service Offers a Full Line of Services
5Providers Limited to
Serving their Immediate Geographic
Area
6 Siloed IT Services for Functions, Services, and Departments
Legacy System Value-Based System Agenda
Copyright © Michael Porter 20138 Copyright © Michael Porter 20138
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Timeline
Copyright © Michael Porter 20139
Value Based Health Care Case Studies
Case StudyMedical Condition Location
Specialty IPUs
Primary Care
Outcome Measure‐ment TDABC
BundledPricing
SystemIntegration
GeographicExpansion
Role of Payors
MD Anderson Cancer Center: Interdisciplinary Cancer Care
Head and Neck Cancer, Endocrine Cancer Houston X X
The West German Headache Center: Integrated Migraine Care Migraine Germany X XCommonwealth Care Alliance: Elderly and Disabled Care
Primary/ Preventative Care Boston X X X
Pitney Bowes: Employer Health Strategy
Primary/ Preventative Care US X X
Ledina Lushko: Navigating Health Care Delivery
Adrenal Cortical Carcinoma Chicago X X X X
Michelin Employee Health Strategy* Diabetes Care
South Carolina X X
The Joslin Diabetes Center Diabetes Care Boston XGastroenterology Care at Sweden’s Highland Hospital
Inflammatory Bowel Disease Sweden X X
Great Western Hospital: High‐Risk Pregnancy Care High‐Risk Pregnancy UK X XBrigham and Women's Shapiro Cardiovascular Center Cardiovascular Care Boston XMartini Klinik: Prostate Cancer Care Prostate Cancer Germany X X X XDartmouth‐Hitchcock Medical Center: Spine Care Spine Care NH X X
Schon Klinik Eating Disorder Care Eating Disorders Germany X X X X* This case was prepared by Elizabeth O. Teisberg, Professor, The Geisel School of Medicine at Dartmouth and Scott Wallace, Visiting Professor,The Geisel School of Medicine at Dartmouth.
Copyright © Michael Porter 201310
Value Based Health Care Case Studies – continued
Case StudyMedical Condition Location
Specialty IPUs
Primary Care
Outcome Measure‐ment TDABC
BundledPricing
SystemIntegration
GeographicExpansion
Role of Payors
UCLA: Kidney TransplantationESRD, Kidney Transplantation Los Angeles X X X
In‐Vitro Fertilization: Outcomes Measurement Infertility, IVF US X X
Boston Children’s Hospital TDABCPlastic, Oral and Orthopedic Surgery Boston X X X
Schon Klinik: Measuring Cost and Value
Total Knee Replacement Germany X X X X
Sun Yat‐Sen Cancer Center: Breast Cancer Care in Taiwan Breast Cancer Taiwan X X XGlobal Health Partner: Obesity Care
Obesity, Bariatric Surgery Sweden X X X X
The Cleveland Clinic: Growth Strategy Health System Cleveland X X X X
ThedaCare: System Strategy Health System Wisconsin X X XChildren's Hospital of Philadelphia: Network Strategy Health System
PhiladelphiaRegion X X
Reconfiguring Stroke Care in North Central London Stroke UK X X
Copyright © Michael Porter 201311 Copyright © Michael Porter 201311
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
Timeline
Copyright © Michael Porter 201312
Value Based Health Care Delivery Courses and Lectures for Executives
Harvard Courses• 2008-2014 – Intensive Seminar in Value-Based Health Care Delivery (1 week full-time)
– Total of 602 participants• 2009-2014 – Leadership Workshop on Strategy for Health Care Delivery (2 days)
– Total of 381 participants• 2011-2014 – Partners HealthCare Value Based Health Care Seminar for Residents and Fellows (3 days)
– Total 200 participants• 2012-2014 – Value Measurement in Health Care (2 days)
– Total of 333 participants
External Courses• 2006-2012 – Health Care Innovation (University of Virginia, ~450 total participants)• 2006-2012 – Executive Workshops (Brigham and Women’s Hospital, St. Francis Hospital, Hoag Hospital, Baylor Health,
G.E., Cigna, Humana… total of ~900 participants)• 2008-2012 – Global Health Delivery (Harvard School of Public Health, ~80 participants)• 2008-2011 – Medical Care and the Corporation (Dartmouth, ~150 participants)• 2009-2011 – Health Care Management (University of Virginia, ~100 participants)• 2010-2012 – UCLA Strategy for Health Care Delivery (~90 participants)• 2010-2012 – Medicaid Leadership Institute (85 participants)• June 2011 – Strategy for Health Care Delivery: United Kingdom (80 participants)• March 2012 – AAOS Enhancing Value in Musculoskeletal Care Delivery (125 participants)• Fall 2013 – Dartmouth Masters in Health Care Delivery Science (50 participants)• Fall 2013 – Executive Workshop Philips Health Care (70 participants)• Spring 2014 – Value Based Delivery Leadership Program: Texas Medical Center (83 participants)
Copyright © Michael Porter 201313 Copyright © Michael Porter 201313
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
Timeline
Copyright © Michael Porter 201314 Copyright © Michael Porter 201314
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
Timeline
Collaboration with Bob Kaplan Begins,
Copyright © Michael Porter 201315 Copyright © Michael Porter 201315
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Timeline
Collaboration with Bob Kaplan Begins,
Copyright © Michael Porter 201316 Copyright © Michael Porter 201316
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
Value Based Health Care Seminar for Residents and Fellows
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Timeline
Collaboration with Bob Kaplan Begins,
Copyright © Michael Porter 201317 Copyright © Michael Porter 201317
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
Value Based Health Care Seminar for Residents and Fellows
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Timeline
Collaboration with Bob Kaplan Begins,
Value Measurement Executive Course
Copyright © Michael Porter 201318 Copyright © Michael Porter 201318
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
Value Based Health Care Seminar for Residents and Fellows
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Value Measurement Executive Course
Timeline
ICHOM is founded
Collaboration with Bob Kaplan Begins,
Copyright © Michael Porter 201319 Copyright © Michael Porter 201319
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
Value Based Health Care Seminar for Residents and Fellows
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Value Measurement Executive Course
Timeline“Redefining German Health-Care” (with Clemens Guth)
ICHOM is founded
Collaboration with Bob Kaplan Begins,
Copyright © Michael Porter 201320 Copyright © Michael Porter 201320
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
Value Based Health Care Seminar for Residents and Fellows
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Value Measurement Executive Course
Timeline
“Redesigning Primary Care” (Health Affairs)
“Redefining German Health-Care” (with Clemens Guth)
ICHOM is founded
Collaboration with Bob Kaplan Begins,
Copyright © Michael Porter 201321 Copyright © Michael Porter 201321
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
Value Based Health Care Seminar for Residents and Fellows
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Value Measurement Executive Course
“Redefining Global Health-Care Delivery,” (with Jim Yong Kim and Paul Farmer, The Lancet)
Timeline
“Redesigning Primary Care” (Health Affairs)
“Redefining German Health-Care” (with Clemens Guth)
ICHOM is founded
Collaboration with Bob Kaplan Begins,
Copyright © Michael Porter 201322 Copyright © Michael Porter 201322
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
Value Based Health Care Seminar for Residents and Fellows
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Value Measurement Executive Course
“Redefining Global Health-Care Delivery,” (with Jim Yong Kim and Paul Farmer, The Lancet)
Timeline
“The Strategy to Fix Health Care,” (with Thomas Lee, HBR)
“Redesigning Primary Care” (Health Affairs)
“Redefining German Health-Care” (with Clemens Guth)
ICHOM is founded
Collaboration with Bob Kaplan Begins,
Copyright © Michael Porter 201323 Copyright © Michael Porter 201323
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
Value Based Health Care Seminar for Residents and Fellows
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Value Measurement Executive Course
“Redefining Global Health-Care Delivery,” (with Jim Yong Kim and Paul Farmer, The Lancet)
Timeline
“The Strategy to Fix Health Care,” (with Thomas Lee, HBR)
“Redesigning Primary Care” (Health Affairs)
“Redefining German Health-Care” (with Clemens Guth)
ICHOM is founded
Collaboration with Bob Kaplan Begins,
“How to pay for Health Care” (with Bob Kaplan)
Copyright © Michael Porter 201324 Copyright © Michael Porter 201324
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
“What is Value in Health Care?” (NEJM)
Value Based Health Care Seminar for Residents and Fellows
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Health Care Leaders Strategy Course, HBS
Value Measurement Executive Course
“Redefining Global Health-Care Delivery,” (with Jim Yong Kim and Paul Farmer, The Lancet)
Timeline
“The Strategy to Fix Health Care,” (with Thomas Lee, HBR)
“Redesigning Primary Care” (Health Affairs)
“Redefining German Health-Care” (with Clemens Guth)
ICHOM is founded
Collaboration with Bob Kaplan Begins,
“How to pay for Health Care” (with Bob Kaplan)