Adding Patient Value to Health Care
Harvard professor, best-selling business author, and management consultant specializing in competitive advantage Michael E. Porter, PhD, offers his free-market spin on health care reform¹ in the July 8, 2009, issue of the New England Journal of Medicine. He begins by rightly noting that decades of debate and fragmentary reform have resulted in no appreciable change in the US health care system. “We have seen no convincing approach to changing the unsustainable trajectory of the system, much less to offsetting the rising costs of an aging population and new medical advances,” Porter begins. 
Michael E. Porter, PhD Porter’s contention is that the primary focus of reform must be on increasing value for patients because the only way to contain costs in health care is to improve outcomes, and that this can only be done by providing universal coverage and restructuring the delivery system. Bundled payments covering episodes of care and interstate competition for patients are highly recommended. The path to universal coverage is multifaceted and begins with insurance reform: first, to guarantee that the only way that an insurance company can prosper is to improve the health of subscribers; second, to end coverage and price discrimination; and third, to require health plans to measure and report subscribers’ health. Employers also must be motivated to stay in the insurance system by reducing the high prices they now pay to subsidize the uninsured. To widen access, individual insurance must be made affordable through large statewide or multistate insurance pools and tax reform enacted to end the unfair burden on people with no access to employer-based coverage. Finally, everyone must be required to purchase insurance, although subsidies will be needed to help low-income people buy insurance. The subsidies can be partially offset by payments from employers who do not offer insurance. The Big Change While extending coverage to all is requisite, the biggest driver of success in improving the health of patients will derive from a restructuring of the delivery system, Porter believes. All providers must measure and disseminate information on health outcomes for every medical condition. The outcomes would be measured over the full cycle of care and would be adjusted for medical severity. Porter proposes using compliance with practice guidelines rather than process measures, and urges the active involvement of the federal government to ensure universal and consistent measurement throughout the country. He acknowledges that developing such an approach will take time, and he recommends the interim step of requiring providers to report the number of patients treated for each condition, as well as the type of treatment or approach used. The delivery of prevention, wellness, screening, and routine health-maintenance services must be rethought and prioritized. Porter notes that large employers with on-site health clinics are achieving great successes. Care delivery must be reorganized around medical conditions because our system of uncoordinated care works against value. To do this, government policies that obstruct integrated care, such as the Stark laws, should be changed or repealed. Porter believes that the abuses that prompted such legislation will fade in a value-based system. Reimbursement must migrate to single, bundled payments covering the cycle of care to align everyone’s interests around improving value to the patient. Payments for chronic conditions should cover extended periods of time and should include responsibility for evaluating and addressing complications. Competition for patients among providers should be encouraged, both within and across state borders. Porter argues that providers need sufficient volume in order to develop deep expertise, integrated teams, and tailored facilities, and he advocates jump-starting consolidation by instituting minimum-volume thresholds. Electronic medical records that support integrated care (and do not just automate current delivery practices) should be encouraged through the establishment of health IT standards that specify precise data definitions, architectures for aggregating patient data over time, and protocols for seamless competition. Last, patients must become far more engaged in their health care. Porter believes that the new integrated care delivery structures, bundled reimbursement for care episodes, and the availability of reliable data will enable that to happen.
Michael E. Porter, PhD Porter’s contention is that the primary focus of reform must be on increasing value for patients because the only way to contain costs in health care is to improve outcomes, and that this can only be done by providing universal coverage and restructuring the delivery system. Bundled payments covering episodes of care and interstate competition for patients are highly recommended. The path to universal coverage is multifaceted and begins with insurance reform: first, to guarantee that the only way that an insurance company can prosper is to improve the health of subscribers; second, to end coverage and price discrimination; and third, to require health plans to measure and report subscribers’ health. Employers also must be motivated to stay in the insurance system by reducing the high prices they now pay to subsidize the uninsured. To widen access, individual insurance must be made affordable through large statewide or multistate insurance pools and tax reform enacted to end the unfair burden on people with no access to employer-based coverage. Finally, everyone must be required to purchase insurance, although subsidies will be needed to help low-income people buy insurance. The subsidies can be partially offset by payments from employers who do not offer insurance. The Big Change While extending coverage to all is requisite, the biggest driver of success in improving the health of patients will derive from a restructuring of the delivery system, Porter believes. All providers must measure and disseminate information on health outcomes for every medical condition. The outcomes would be measured over the full cycle of care and would be adjusted for medical severity. Porter proposes using compliance with practice guidelines rather than process measures, and urges the active involvement of the federal government to ensure universal and consistent measurement throughout the country. He acknowledges that developing such an approach will take time, and he recommends the interim step of requiring providers to report the number of patients treated for each condition, as well as the type of treatment or approach used. The delivery of prevention, wellness, screening, and routine health-maintenance services must be rethought and prioritized. Porter notes that large employers with on-site health clinics are achieving great successes. Care delivery must be reorganized around medical conditions because our system of uncoordinated care works against value. To do this, government policies that obstruct integrated care, such as the Stark laws, should be changed or repealed. Porter believes that the abuses that prompted such legislation will fade in a value-based system. Reimbursement must migrate to single, bundled payments covering the cycle of care to align everyone’s interests around improving value to the patient. Payments for chronic conditions should cover extended periods of time and should include responsibility for evaluating and addressing complications. Competition for patients among providers should be encouraged, both within and across state borders. Porter argues that providers need sufficient volume in order to develop deep expertise, integrated teams, and tailored facilities, and he advocates jump-starting consolidation by instituting minimum-volume thresholds. Electronic medical records that support integrated care (and do not just automate current delivery practices) should be encouraged through the establishment of health IT standards that specify precise data definitions, architectures for aggregating patient data over time, and protocols for seamless competition. Last, patients must become far more engaged in their health care. Porter believes that the new integrated care delivery structures, bundled reimbursement for care episodes, and the availability of reliable data will enable that to happen.