Opening Session Speaker Dr. Michael E. Porter Discusses Current State, Future Directions of Value-Based Health Care

Opening Session Speaker Dr. Michael E. Porter Discusses Current State, Future Directions of Value-Based Health Care

Dr. Michael E. Porter
When Michael E. Porter, PhD, Bishop William Lawrence University Professor with Harvard Business School (HBS), co-authored a book on value-based health care in 2006, he didn’t know what to expect.

The book, Redefining Health Care: Creating Value-Based Competition on Results, hypothesized that health care delivery in the United States and elsewhere was not structured to deliver value for patients, defined as the patient health outcomes achieved relative to costs required. The book put forward a new framework for how health care delivery should be organized, measured, and reimbursed to maximize value.

Dr. Porter remembers an economist friend calling the book a “utopian vision” that could not occur.

“People in the field had been talking about some of these ideas for decades, and nothing much had happened,” Dr. Porter said.

Nine years later, the shift from volume- to value-based thinking is unmistakable. But there is still a long way to go, Dr. Porter said. He outlined a strategic roadmap for health care organizations in his 2013 Harvard Business Review article, “The Strategy That Will Fix Health Care,” and he will discuss the roadmap and its implications during his Opening Session speech Saturday, May 29, 9:30 AM-12:00 PM, in North Hall, B1.

In the following interview with the ASCO Daily News, Dr. Porter discusses the current state and future directions of value-based health care delivery.

Daily News: What do you plan to discuss in your speech?

Dr. Porter: My core field is competition and strategy for companies. About 15 years ago, I began applying these concepts to health care delivery, recognizing that health care had many unique characteristics that had to be understood. A body of work emerged that has come to be called value-based health care delivery, which has built out the key concepts and tools to allow providers to dramatically improve what they do. There is a substantial team here at Harvard and at other institutions working in this area, and a body of concepts, curricula, and case studies on value-based health care delivery has emerged.

One of the key ideas in value-based health care is the need to move beyond specialties to truly integrated care. I hope to persuade medical oncologists to team up in deeper and more structural ways with surgical oncologists, radiation oncologists, and other specialties.

Ultimately, moving to value-based care involves a complex industry transformation. There is more movement today than in many decades.

The core of my talk at the Opening Session will be about the fundamentals of value-based health care delivery: How to substantially improve the value of care for patients, including both better outcomes that matter to patients and lower costs. I will sketch some of the implications of this thinking to cancer care, and to medical oncology.

ASCO has begun to embrace the idea of value. My goal in the talk is to reinforce this direction and identify the key areas where it needs to go next.

Daily News: You’ve written extensively about health care for the last decade and a half, but your career started in market competition and company strategy. Why did you become interested in health care?

Dr. Porter: Elizabeth Teisberg, PhD, the co-author of the book Redefining Health Care, was teaching in my group here at HBS. She experienced the challenge of having two children with serious health problems. As we talked over time about her journey, both with her children’s care and with the insurance companies involved, it was clear that the system was not focused on value for patients. Competition in the field was broken.

More broadly, I have always believed in competition and its power to make things better. In health care there is competition, but competition seemed to be broken because costs kept going up and quality remained erratic. I was drawn to trying to understand why, and what to do about it.

Daily News: How do you measure value in health care?

Dr. Porter: Value is outcomes relative to cost. Outcomes are the actual results of care, across the multiple dimensions that matter for patients. We need to measure outcomes, not just compliance with evidence-based guidelines or patient satisfaction. A big problem in health care has been that quality is often defined as ‘Did we go through a good process?’ rather than ‘Did we achieve a good result?’

In order to properly measure outcomes, the focus must be on clinical conditions, not specialties, procedures, or sites of care. You can’t measure outcomes for ‘cancer’ because every cancer is different and involves different clinical and functional issues. We introduced the concept of the outcome hierarchy to systematically identify the set of outcomes that matter to patients for a given condition. This thinking is starting to spread rapidly across fields and countries.

On the cost side, health care organizations have not measured actual costs by patient condition over the full care cycle. Instead, costs are typically measured around departments, and cost allocations to conditions or patients are typically based on charges, not actual costs. With Robert S. Kaplan, PhD, at HBS, an entire new body of concepts on measuring costs in health care has been developed.

Daily News: You have described health care as a ‘fact-free world.’ What did you mean by that?

Dr. Porter: To have success in any field, you have to have to measure success. Without facts, opinion and ego determine behavior. Although oncologists deal with a lot of facts about drugs, molecular markers, and clinical trials, what is lacking is knowledge of the overall clinical and functional outcomes and the costs for the patient’s overall care for his or her disease. This is true throughout health care. The outcomes of care, and the costs of achieving them, have simply not been widely available.

Daily News: Do you think health care providers and hospitals understand the merit of value-based delivery?

Dr. Porter: We have had the opportunity to work with care delivery organizations all over the world. The understanding of value thinking is spreading very rapidly. Just about everyone now accepts the idea that health care is about value for patients. How can you be against that? Now, it’s about getting it done. It is not easy, but there are many hundreds of case studies written or in process.

Daily News: Has health care delivery changed over the 15 years that you have studied the industry?

Dr. Porter: I think the most progress has been on the insurance side, starting with getting more people covered. This is clearly important for cancer care.

There have also been improvements in the rules of competition in the insurance market, such as enabling coverage for those with pre-existing conditions and for individuals who are not part of a group. There has also been progress in helping people from lower-income households obtain coverage. The greatest effect of the Affordable Care Act is on insurance.

The delivery of care is now the pressing problem. There has been some movement toward transparency in government policy—for example Centers for Medicare and Medicaid Services is now tracking readmission rates. That’s value-based thinking. There is now a proliferation of measures that providers are being asked to track, but most of them are still process measures. But true restructuring of the delivery of care has a long way to go.

Daily News: When do you think value-based health care delivery will come to fruition?

Dr. Porter: Progress is accelerating, but it will be a decade or more before value-based thinking permeates all levels of the system. And, improving the value of health care delivery will never be finished. It will always be possible to improve more outcomes and eliminate costs that don’t add value to patient outcomes. Most industries are in a perpetual state of restructuring and improvement, but health care delivery has been frozen for decades. Finally the ice is melting.