Value based healthcare Introduction; Lecture 1 part A

Value based healthcare Introduction; Lecture 1 part A Value-based health care (VBHC) -It is a vision on how to improve health care systems in general -Research on the interpretation and implementation on VBHC in NL Micheal Porter – The roots of VBHC -Competition drives improvement

-Value chain: all the activities an organization performs, which together

create a valuable product or service

-Central premise: in any industry, a successful and sustainable enterprise

needs te create value … -Patient value  The health-related outcomes that matter to patients, divided by what it costs to achieve those outcomes  Overarching goal for all system stakeholders; to improve value What do patients want? What matters most to patients?-To get better  to achieve the best possible treatments outcomes -Outcomes  The effects of care on the health status of patients  Usually multiple relevant outcomes Costs -Treatment come at a price – we pay for our health care oSome treatments are more expensive than others oSome providers charge higher price  If two providers/ treatments have the exact same outcome, we should go for the less costly one Value for patients -The health status they achieve (outcomes) and the price they have to pay for it (costs) -Optimizing this equation becomes the central goal, the best outcomes, as efficiently as possible oKey principle  Value in health care is created at the level of medical conditions, over the full cycle of care -Value = outcomes / costs Value is created at the level of medical conditions -Patients seek health care to address health related issues/ disturbances -Those issues (complaints, symptoms) are usually directly related to a particular medical condition -Ergo; professionals create value by addressing specific conditions -The idea is that health care is not delivered as narrow as medical experience. Value is not created at a level of specific medical conditions.Value is created over the full cycle of care -Value is generated through the full set of activities (i.e. value chain) -Full care cycle; from start to end (diagnosis to rehabilitation) oSurgery for example, is only one element of the full cycle. Patient outcomes also matters, like how someone feels after a surgery Value should be the goal – value is created at the level of medical conditions over full cycles -1. Measure & reporting – 2. Organizing – 3. Payment 1 / 4

Measurement & reporting -Providers should systematically measure the outcomes and costs of their care cycles -Results should be reported and publicly disclosed (transparency) -This will enable effective comparisons and allow all parties to make more value-based decisions Organizing -Organizational structures based on value creation; at the level of care cycles (value chain) for medical conditions -Radically different from the traditional structure of hospital based on medical specialties -Integrated practice unit (IPU); multidisciplinary team, coordinating all the specialized knowledge and skills that are needed to address a medical condition Payment -Payment aligned with value creation, reimbursing care cycles at the level of medical conditions -Bundled payment instead of multiple separate bills within the same care cycle (i.e. fee-for-service) -Incentivizing value (not volume) Value-based payment -Removing adverse incentives (e.g. for overtreatment) -Alternative to fee-for-service (providers are rewarded for volume) -Instead; rewarding good outcomes & efficiency 1.Rewarding with more patients (Porter). Rewarding with more patients 2.Financial bonus (pay-for-performance). Directly reward a provider with a financial bonus Value-based competition 1.Systematic outcome measurement (start measuring the date that matters to patients and share the information with the patients) 2.Excellent providers rewarded with more patients = more patients receiving excellent care 3.Providers who cannot keep up should restructure or go out of business (which would be good for patient value)  The right kind of competition will unleash “dramatic improvements in value” – porter & Teisberg Integrated practice units Lecture 1, part B Hospitals have a structure based on medical departments, that is also how the authority and the money is structured – along the line of medical specialities.Integrated practice units (IPUs) -Hospital and other health care providers are typically organized along the lines of medical specialties (e.g. neurology, oncology) -Porter and colleagues propose a radical reorganization aligned with care cycles for medical conditions (and the creation of value) IPUs  Organizational units in which a multidisciplinary team of (dedicated) professionals and supporting staff are grouped together (and co-located) to 2 / 4

coordinate their independent tasks with the overarching goal to improve value to a particular group of patients Confusion about IPUs -Some miss the crucial point that the concept refers to organizational units -Multidisciplinary collaboration is common, IPUs are rare oThe key thing is there should be a unit (the same budget, their own decision-making unit) They refer to organizational units -Part B; clarifying the meaning of IPUs (Porter VBHC and Mintzberg) Organizational structures (Mintzberg) -Organizational structure  The way an organization designs it task allocation and coordination -Organizations have various design ‘knobs’ to turn -Division of labor divided different tasks and to coordination of these tasks.Unit grouping -Organizations have various ‘knobs’ (design parameters they can turn oJob specialization, behavior formalization, unit size, unit grouping, vertical and horizontal decentralization, training and introduction) -Unit grouping (important knob) – achieve coordination’s in two mean ways oLines of authority (coordination via supervision) oClose contact (coordination via informal communication) Mutual adjustment Unit grouping in two typical ways -Function-based grouping oEach line represents a group of people with a particular set of knowledge and/ or skills oThese units are grouped based on the means (the functions) of a production process -Market-based grouping oEach line represents a group of people that serve a partical market oThese units are grouped based on the ends of a production process Patients with a common set of needs The structure of hospitals – Hospitals typically have a ‘functional design’  the organizational structure is based on specialized skills -Hospitals group their units based on separate functions (means) -Long tradition oHistory of medical specialization oIncreasingly specialized professionals with complex knowledge and skills oGrouped into speciality-based units Criticism and alternative -Outdated legacies of a past century of medical specialization -Issue of coordination and dealing with interdependencies of workflows between units oCoordination gets lost or opportunities missed The VBHC alternative; IPUs -They embody the central principle of a value-driven organization; to organize around customer needs, not the supply of particular services 3 / 4

Reorganizing into (market-based) IPUs -Pressure hosipitals to do what they are good at. Maybe you want a hospital to focus on some special catagories.-Volume tarsals (volumenormen) -Higher value in more concentrate locations Practical changed (in NL) -History and interest (you cannot just wash this away) oPorter seems to underestimate these things. Cultural believes.-Public opinion (What is right and what is wrong. Moral arguments) -Radical versus incremental change -Informal collaboration versus formal reorganization oConnections between units. There are operating on the level of patient’s groups and do units on patients care, but informal. How can we improve the outcomes for patients?Value based health care – IPUs in practice; Diabeter 75% of the people in the Netherlands develop diabetes type 2, this type finds its cause in lifestyle Lifetime focus is essential to improve wellbeing and outcomes for T1 diabetes Quality of life, the most important outcome for patients, is directly and indirectly influenced by glycemic control Better value diabetes care = better outcomes for diabetes/ lower costs for diabetes care A value based approach to treat Type 1 Diabetes -When the patients come to the clinic there is a team -Focus only on type 1 and specialize in T1 Diabeter claim is that it has higher investments and uses more technology, but this leads to lower total average annual costs per patient compare to other NLD health providers VBHC in Erasmus MC Patient as a partner  personalized care Implementing PROM’s in daily care.Integral Care Agreement -Value based -Together with the patient, inclusive -Right care at right place -Focus on health instead of disease -Good working environment for healthcare professionals Programmatic approach -Governance – organization chart VBHC PROM structure 1.Generic

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