Big Data Meets the Value Paradigm

VDO-Option3FlatA little over a year ago I shared a post on healthcare pricing: Pick A Price, Any Price. I wrote about the challenges, difficulties and consequences associated with the frustrating disconnect between hospital charges and the actual costs of proving care in those hospitals. At the time I also referenced the work of Michael Porter and Robert Kaplan that was published in the Harvard Business Review article, How to Solve the Cost Crisis in Healthcare.

I am excited to share with you research inspired by that article that was recently completed at the University of Utah, spearheaded by Dr. Vivian Lee, the senior vice president for health sciences and Dean of the University of Utah School of Medicine. Highlights of the research were published in the article, Hospitals Are In the Hot Seat, on the University of Health Sciences’ Algorithms for Innovation web site.

In a nutshell, colleagues representing several industry disciplines worked together to explore how harnessing Big Data and applied research might help empower patients and healthcare providers with more timely, more reliable – and most importantly, most understandable cost information and how costs compare to care received and outcomes achieved.

We’re all familiar with Peter Drucker’s challenge that, “if you can’t measure it, you can’t manage it.” Though less famous but probably more meaningful – or at least pragmatic – was Drucker’s quote that, “what’s measured improves.” Historically for healthcare trying to measure, apportion and determine meaningful costs at a granular enough level where that information has timely and impactful use has been elusive.

Here’s hoping this work is another step in the right direction.

Cheers,
  Sparky

Healthcare 2014: The Untrends List

One week into the new year, and here I am already probably tearing at the limits of content relevancy, thinking about how to write something meaningful on what to look for in 2014. What are the emerging industry trends and drivers that healthcare executives need to understand and reflect in their 2014 strategic planning? What’s the competitive landscape going to look like? How will diverging synergies of clinical partnerships impact silo management tendencies? How many overused business school concepts can be stuffed into a blog post?

To be candid, I really wanted to write something here that was keen on unique insights and observations. That had a lofty air containing pearls of wisdom. But the more I thought about what to write the more daunting became the effort of where to start, what to include and how to organize my thoughts without losing you to confusion and boredom in the first paragraph.

And being confused myself under the weight of my inability to organize that thinking it dawned upon me that I was tripping over the most common intellectual obstacle: failure to accept that too often our desire to embrace the complex hides our fear of accepting the wisdom of simplicity.  And that reminded me of the scene below between Billy Crystal and Jack Palance in City Slickers. It epitomizes the challenge we have in accepting simplicity.

Curly’s One Thing

So what’s the ONE THING that healthcare providers need to focus on in 2014? Easy answer: the same thing they needed to focus on in 2013. And 2005. And 1919. VALUE. But just as our understanding of life can be both simple and difficult – so too can learning to strategically position a healthcare organization around value.

The concept of providing value is ancient.  Yet the ability to create, deliver and capture value is an increasingly important – and contextual – competitive advantage when resources become constrained at the same time demand is accelerating. Value-based pricing and cost reimbursement models are only a part of the value-driven healthcare paradigm. It’s the small top part of the value delivery pyramid (or perhaps iceberg is a more fitting analogy).

Critically important to understand is what the patient values. And even more important is accepting the processes that patients use for determining and comparing relative value does not easily lend itself to linear thinking or evidence-based protocols. Similarly, the individuals who create and bring value to patients cannot be made to fit into standardized care delivery machines. And understanding how they assess and compare relative value is every bit as important in creating a competitively superior healthcare offering.

Healthcare providers are increasingly being asked to share in the risk of care delivery economics. I know that must sound ironically distasteful to many, since they have already for centuries borne the ultimate risk of patient outcomes. But on the whole, I believe it’s an oddity of our healthcare financing system – not a perverse entrapment designed to reallocate resources away from production – that seeks to align the incentives of multiple participants around value.

If, however, that understanding is ultimately manifested in just measuring and promoting value – without creating and delivering value – value-driven pricing and reimbursement models will necessarily fail, whether that’s payment bundling, ACOs or medical homes. But – those organizations that learn to create and deliver value by strategically positioning themselves in lieu of the industry migration toward integrated care delivery will survive whether those new models succeed or not.

So my list of trends and drivers for 2014 is simple: value, value & value.

Cheers,
  Sparky

It’s About Value, Stupid

The title of this post is a reminder to myself and not intended to offend the millions of other participants in healthcare to whom its application may or may not apply. I remind myself of this assertion quite often – primarily because I believe it provides the singular most important connection between the practice of healthcare and the business of healthcare. It also has the theoretical advantage of transcending many of the political realities of public policy because it reinforces commonly held beliefs regarding individual liberties, morality, as well as social consciousness.

That is why I am very excited about a new initiative I wanted to share with Pub visitors: last week, the New England Journal of Medicine announced a new collaborative publishing initiative with Harvard Business Review. Beginning on September 17th, new articles are being shared daily via the Insight Center for Leading Health Care Innovation.  Over an eight-week pilot period new articles will be posted daily, “from numerous experts across health care and business communities.” The content shared will be free during this pilot phase, so I strongly encourage you to at least take a few minutes to peruse the variety of information and insights offered there.

One of the most prominent initial contributors, Michael Porter, has written and spoken at length on Value in Healthcare. In fact, he and his coauthor, Elizabeth Olmsted Tiesberg, published Redefining Healthcare in 2006, in which they argued that historically health care systems have competed to shift costs, accumulate bargaining power and restrict services – rather than create value for patients. To address this shortfall Porter and Tiesberg have offered specific policy recommendations they believe can help reposition the potentially positive effects of market competition from between health plans, networks and hospitals to where it would be a lot more effective in producing value: i.e., at the level of diagnosis, treatment and prevention of high cost illness and conditions.

I should also note (and recommend) Porter’s latest article featured in the October issue of HBR and coauthored by Dr. Thomas Lee (CMO at Press Ganey), The Strategy That Will Fix Health Care. Porter and Lee rightly argue that healthcare providers are the only ones who can ultimately reframe the US healthcare delivery system into one that delivers high value. They discuss six interdependent components:

1. Organizing around patients’ medical condition
     rather than  physicians’ medical specialties
2. measuring costs and outcomes for each patient
3. developing bundled prices for the full care
    cycle
4. integrating care across separate facilities
5. expanding geographic reach and
6. building an enabling IT platform

I think they purposely left off #7, pushing the camel through the eye of a needle. Please don’t take my sarcasm for lack of interest and support, but I am of an age where I tend to be a realistic chap. Between the theory espoused on the pages of HBR and the practice that is often manifested in care providers’ growing frustration with the obstacles they face in caring for their patients lies the enormous ball of yarn, which has been healthcare public policy in the US for the past 50 years.

I do believe, however, the value paradigm offers great promise in building a healthcare system where lower cost and higher quality are not viewed as a diametric choice but rather complimentary results of market competition. But there are indeed miles to travel before any such paradigm shift can be realized.

Value is not a foreign concept to healthcare, so I want to be wary of conveying the sense that a silver bullet exists, just waiting to be found so that in a single shot our delivery system can be cured. But value – whether seen through the prism of a patient’s ability to assess a surgical procedure, an insurer’s ability to assess the quality of an outcome or a nurse’s ability to assess the fairness of his or her employment contract – is way too often obfuscated to the point where it cannot serve the purpose of driving competitive performance.

I am hopeful the contributors to the new Center will be mindful of this observation as they seek to promote the potential benefits of a value-driven healthcare system.

Cheers,
  Sparky