Value-Based Healthcare Delivery: The Agenda for Oncology

August 2015 Vol 8, Special Issue: Payers' Perspectives in Oncology

The presidential keynote address at ASCO 2015 was presented by Michael E. Porter, PhD, MBA, Bishop William Lawrence University Professor, Harvard Business School, Boston, who started the value discussions a decade ago. A strong proponent of changing the healthcare system to focus on value, Dr Porter suggests that the fundamental purpose of healthcare is to deliver great outcomes with increasing efficiency, but achieving this goal requires more holistic thinking about delivery care as science.

“The question is how to significantly improve value,” said Dr Porter. “How do we actually organize ourselves, measure ourselves, and get paid in ways that support, encourage, and enable the dramatic improvement of value?”

His answer includes the following 6 fundamental strategic agendas:

1. Reorganize Care Around Patient Conditions. The first principle of organization is organizing around the need that you are trying to meet. For healthcare systems, this means moving away from the intervention- and site-of-care–based structure into integrated practice units, serving distinct patient segments for primary and preventive care.

“[Because] we can’t understand value for a hospital or even an oncologist,” Dr Porter said, “we’ve got to look at the overall condition of the patient. We can only measure value for the condition.” When examined in distinct segments, outcomes can be properly measured and costs can be considered.

“If we add up all the costs of all the interventions provided over the whole cycle of care for breast cancer, for example, and compare that to the outcomes, then we have the magic data that we need to truly understand value,” said Dr Porter.

2. Measure Outcomes and Costs for Every Patient. The most powerful single lever for reducing cost is improving outcomes, yet “we don’t even know what the outcomes are in 99.9% of the circumstances,” he added.

“We actually have to start to measure every day, all the time. We can’t just rely on clinical trials that are somewhat artificial circumstances for our data on outcomes. We have to actually start measuring outcomes by condition, and we have to start tracking the cost.”

This will require changing our accounting so that costs for the care of ­­an individual patient are measured throughout the patient’s journey. Without this, said Dr Porter, healthcare organizations have been operating blindly to a considerable extent.

3. Move to Bundled Payments. Although oncologists have done well with a fee-for-service model from an economic point of view, it does not make sense from a value point of view.

“Fee for service doesn’t reward us for delivering value,” Dr Porter said. “In fact, it rewards us for not delivering value, because if we do more, and it’s more complicated, or if we go slowly, we get paid more.” There is only one way oncologists can get paid that actually rewards and motivates the delivery of value, and this is bundled reimbursement.

“We have to become advocates for a new payment model—a single payment, often risk-adjusted, for the care for a condition,” he said.

4. Integrate Multisite Care Delivery. “We’re not getting the right services to the right locations,” said Dr Porter. “We’re doing simple stuff in academic medical centers and complicated stuff in community settings where we really have no hope of delivering value. We have to aggregate volume.”

He thinks that volume is critical for the delivery of value. To gain the benefits of measurement, patients with a given type of characteristic and with a given set of issues need to be gathered around the right team.

“Everybody can’t do everything. We’ve got to aggregate care to 1 or 2 sites in each area if we’re going to ultimately deliver value,” Dr Porter stressed.

5. Expand Geographic Reach in Areas of Excellence. Excellent organizations need to stretch across geography, not only through ownership of other facilities but also affiliations.

“We’ve got to get away from the localized model today that is predominant in healthcare, beyond the few academic medical centers,” he said.

6. Build an Enabling Information Technology Platform. Finally, delivering value requires putting in place the right information technology (IT) infrastructure to aggregate the data in order to measure outcomes and understand cost efficiently.

“IT systems are getting better,” Dr Porter said, “but we have a long way to go before we get all that infrastructure aligned with this model.” Organizations that have incorporated these agendas are succeeding across many fields of medicine and in many parts of the world, he said.

“We know the path,” he concluded. “If we can actually become a value-based field in this sense, imagine what healthcare could become.”

Last modified: August 30, 2021
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