Value for Patients

By Elizabeth Teisberg, PhD and Scott Wallace, JD, MBA

August 16, 2015

Value, achieving improved health outcomes for the money spent, is the goal of health
care. 1When Redefining Health Care published in 2006, critics worried that value was a
utopian goal and better outcomes would always require higher spending. 2 While the goal of
higher value is now widely accepted, a persistent question arises: “Value for whom?” The
unequivocal answer is value for patients.

Patients are the reason that clinicians practice and that hospitals and health plans provide
services. 3The existential purpose of health care is to serve patients, improving their quality
of life and dignity of death. Health care achieves this by helping patients retain or regain
capabilities and freedom from pain. Improving meaningful outcomes for patients is the calling
of clinical practice. Better outcomes for patients also increase the value of health care,
aligning value with professionalism.

Everyone agrees that U.S. health care spending is too high. There are many ways to reduce
it. The value perspective identifies organizational innovations that drive better outcomes
for patients in ways that reduce costs. Increasing value is surely preferable to increasing
limitations on care or access.

The Right Kind of Competition for Care Delivery Innovation

Innovation in most sectors of the economy drives remarkable improvements. Consider

changes in phone service over the past 15 years. Cameras, airplane boarding passes, apps,
web service, credit cards and a flashlight are all innovations. Imagine health care delivery with
that pace of innovation, adoption and diffusion of new technology and services.

The talent and passion of clinicians, and the importance of their mission, should trigger
dramatic innovation that increases value for patients and families.

But it hasn’t, as evidenced by persistently poor national health outcomes, errors, disparities,
unwarranted variation, waste, limited access, and rising spending. Instead of innovation,
competition in health care delivery services focused on increasing the volume of services
provided while battling over who bears the costs. The question of “value to whom” is a vestige
of that cost-shifting mindset – a focus on dividing value rather than creating it.

Increasing value for patients unifies the goal by recognizing both the purpose of care and the
reality of cost. This aligns interests. Patients benefit from better health outcomes, clinicians
pursue their professional calling and provider organizations fulfill their service mission. Payers
seek more efficient ways of achieving good outcomes and society efficiently realizes the
wellbeing and productivity of good health.

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Competition to create more value for patients fuels a positive innovation dynamic. The biggest
value increases occur when health outcomes improve in ways that reduce the costs of care.
For example, a stroke patient who does not become paraplegic has lower long-term care
costs because of the better outcome. Frail, elderly patients whose tailored care allows them
to live safely at home can avoid the higher costs of nursing homes. Because living in good
health is inherently less expensive than living in poor health, there are myriad ways that better
outcomes also lead to lower costs. A patient with diabetes whose condition does not progress
to kidney failure or amputation will have lower costs due to good outcomes. Early diagnosis
of colon cancer allows effective treatment that is less invasive and less expensive. Flu can be
accurately diagnosed on a video call, enabling convenience, faster treatment and recovery
without exposing others.

Transformation of Goals from Volume to Value

Traditionally, value was not health care’s goal. U.S. health care was assumed to be very
good, but too expensive. From that perspective, policy aimed to reduce spending, hopefully
without sacrificing quality. Simultaneously, clinicians were held morally responsible for doing
as much as possible for every person in their care. Payers pressured providers for lower
prices per treatment, but spending rose because the volume of services grew. In the volume
based system, “good” physicians were identified by effort –actions taken and hours worked,
not results. Leaders were not focused on how to improve outcomes in ways that reduce costs.

The transformation to a value mindset begins with the simple observation that patients and
families seek health, not more treatment. No one seeks an extra, unnecessary colonoscopy.
The purpose of health care is to improve health – cure disease, repair injury, preserve
capability, and to enhance wellbeing throughout life. Treatment is an intermediate good, a
means to better health. Patients would prefer health without invasive tests and recovery
without hospitalizations, surgery or the side effects of medications. They endure treatment in
pursuit of regained capabilities, comfort and calm.4

Measuring Outcomes that Matter to Patients

The results that determine value are the outcomes that matter to patients in the medical
circumstances they face, and the total costs of achieving them. These results need to be
measured at the level where value is created for patients – in helping a person who is
receiving care for a specific set of health circumstances. At the level at which value is created,
patients can readily identify the outcomes that matter. For patients with a particular condition,
a handful of functional outcomes describe significant differences in their quality of life – during
the care experience and after completion. Patients with head and neck cancer are concerned
with survival and with retaining the abilities to swallow, eat and talk. Patients with asthma
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want to breathe comfortably, avoid emergencies and be able to exercise. Patients with
diabetes are often concerned about being able to walk or dance, to see and to make love.
Measuring a relatively small set of functional outcomes, not hundreds of processes, allow
teams to accelerate improvement of those results and support professional excellence.
Because patients care about multiple aspects of their results, value is multidimensional.
Patients with advancing prostate cancer are concerned about survival, continence, potency
and depression. The dimensions are usually non-commensurate. The outcomes can be
displayed on a diagram, but can’t be added because each outcome might be measured
on a different scale (e.g. years, dollars, amounts of pain). Even if the measures were
commensurate, different individuals would weight them differently, so there is no one measure
for aggregate quality of life outcomes. The multiple dimensions need to be kept distinct
so that patients and clinicians can make good decisions and so clinical teams can clearly
understand their progress on improving results for patients. Comparing outcomes for different
conditions or circumstances often is not meaningful. The results of care for a broken leg
can be compared to other care for a broken leg, but can’t be meaningfully compared to the
value of delivery of a healthy breach baby or reversing the progression of diabetes. Making
comparisons at levels too fragmented or too aggregated to describe how value is created
for patients is also unhelpful. For example, quality measured across an entire hospital is
too aggregated to be meaningful. A hospital may have exceptional results for breast cancer
treatment but consistently below risk-adjusted expected results for kidney transplants. In this
case, a single hospital quality score is not meaningful. Comparing fragments of the care cycle
is also misleading. Patients and clinicians need outcomes for patients’ full continuum of care,
not just for surgery or radiation or chemotherapy or rehabilitative care.

Measure for Improvement, not for Judging

With appropriate risk adjustment, the multidimensional results for patients can be compared
across different types of care, different protocols, different clinicians or different clinical teams.
By looking at results from many patients, physicians and teams can gain insight on whether
their team’s patients fare better or worse than similar patients treated elsewhere or treated
with different care processes. Facts are friendly. Sharing outcome data enables learning and
improvement. For patients with cystic fibrosis, life expectancy has more than doubled since
outcomes have been tracked and compared. If a physician’s patients were not achieving
better than average life spans, that clinician could see that and learn from those whose
patients had better outcomes over time. 5 The inherent professional incentives of physicians
and other clinicians are to improve outcomes for their patients; simply put, to be better
doctors. Because they appeal to professionalism, data on meaningful outcomes provides
stronger incentives than most financial bonuses. Measuring meaningful outcomes inspires
learning. Every organ transplant in the U.S. is recorded in a registry maintained by the United
Network for Organ Sharing (UNOS) and a surgeon or hospital cannot get another organ for
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transplantation unless outcomes for previous patients have been reported. UNOS reports
results for every facility and sophisticated risk adjustment enables reporting of whether
outcomes exceed or miss expected results. The percentage of kidney transplant patients with
one-year graft survival has risen significantly and the variation among teams has shrunk as
expertise increases and is shared. In 1989, about 80% of patients’ grafts survived the fist year
and 10% of facilities had worse-than-expected results after risk adjustment. In 2013, 95% of
patients’ grafts survived the first year and only 2.4% of facilities had below-expected results.
The improvement by clinical teams benefits patients, whether or not patients use the data to
chose a provider. 6 Such comparisons also drive learning about what a person or team does
especially well and where improvement is needed. For example, MD Anderson compares
functional outcomes for head and neck cancer patients among surgeons. This analysis,
combined with observations by nurses on the team, led to the realization that the precise
location of a small number of stitches affected patients’ abilities to swallow and eat after
surgery. Again, both patients and professionalism were well served.

Learning from Positive Outcomes During Care

Outcome measurement can drive improvement during the care process. Clinical
psychologists at the Cincinnati Children’s Hospital Medical Center used patient reported
functional outcomes to assess the progress during care for their pediatric patients being
treated for obsessive compulsive disorder. 7Treatment sessions typically lasted about an hour
and the only available assessment tool required considerably longer to administer and score,
so they developed a new approach. The primary determinants of success in OCD treatment
are control, distress and functioning – essentially questions about whether the child could
control the urges of the condition, was distressed by them and could function in everyday
activities. The clinicians developed a single-page assessment form that each child was asked
to complete before therapy sessions. Brightly colored with a ten point scale that indicates the
disease in control in yellow and the patient in control in green, patients were asked to rate
their level of mastery over the disease by indicating whether they could play with friends, play
video or other individual games, manage the urges of the disease and complete homework
tasks. Using surveys collected throughout a full cycle of care (typically 18-24 weeks), the
team sorted patients into four groups based on whether there was no, slow, inconsistent or
rapid improvement. Further analysis revealed that the patients with rapid improvement were
treated using a specific technique of cognitive behavior therapy. 8The psychologists whose
patients had achieved the best results worked with others on the staff to achieve consistent
practice, and the results were stunning. Shortly after the changes in practice, 65% of patients
achieved significant improvements in symptoms after only four sessions. The average number
of sessions required for patients to become symptom free dropped to 12, and the rate at
which patients dropped out of the program fell by more than half.

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Organize Teams around Patient Needs and Medically-Defined Populations

As the CCHMC results demonstrate, a great team dynamic can drive learning, improvement
and success. Most health care, however, is delivered by groups, not teams. Often, when a
patient presents for care, a group is assembled as needed, depending largely on availability
of personnel on-site or oncall. These groups rarely share a panel of patients, so even if some
clinicians have worked together, they lack a shared learning process and tight relationships
of a standing team. 9Most providers are organized for treating every patient, no matter how
unusual the condition. As a result, they are inefficiently structured for the most common
needs. Fracturing resources into parts and pieces enables the flexibility to construct a care
group for any patient, but patient journeys through this system are inefficient, more error
prone and less effective than they should be. Every person is individual, but this does not
mean that his or her health care needs are entirely unique. Most people are part of medically-
defined segments of the population: for example, they have spinal injury, coronary artery
disease, are spry in spite of old age, or are frail with multiple chronic conditions. Even small
hospitals have some segments of patients with relatively predictable medical circumstances
— an expected number of breast cancer, heart failure or asthma cases. Organizing around
medically-defined segments enables efficiency and accelerates team-based learning about
improving care experiences and outcomes. Patients of The Joslin Diabetes Center in
Boston see a multidisciplinary team of caregivers who share a panel of patients and meet
regularly to discuss their care and insights about what works. 10Insights from the Joslin’s
methodical learning and consistent processes have been collected and documented to
create a franchised model of care. Most care delivery is organized around departments,
services, procedures or facilities, rather than for specific patient groups and the integrated,
full-cycle care they need. Health care’s well-documented unwarranted variations in care
and outcomes11 could be dramatically reduced by more use of standing teams organized
around common medical conditions. The starting place is asking what do patients with a
particular set of circumstances usually need? For example, what services are usually needed
by patients with traumatic brain injury? What services are needed by frail elderly patients
who have multiple chronic conditions? The multidisciplinary team for a segment of patients
needs to include the professionals from whom the patients typically receive care. Having
the commonly needed services in the same hospital or health system isn’t enough. There
needs to be an identified team for the segment of patients. Every clinician need not be full-
time with this patient segment, but when a frail elderly patient needs a nephrologist, there
should be someone who regularly works with the frail elderly team. If those identified team
members are not in the same network or the same location, they still need a consistent,
ongoing relationship to improve outcomes and reduce costs as a team. Many organizations
start the process of creating teams by assembling some of the people who contribute to care
in a particular pathway. The clinicians’ early tasks are to identify consistent and safe care
pathways, improve patients’ experiences and results, and streamline processes to cut costs.
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The need to cut costs often provides the sense of urgency, but the more inspirational o
pportunity is to understand the potential to accelerate improvement in outcomes.

Teams Enable Payment Aligned with Medical Success

Provider organizations that have teams defined around patient segments are better prepared
for new payment models. Team-based payment can improve alignment of medical and
financial success. While some organizations pay teams for care bundles, it’s more common
to achieve team-based payment through salaried physicians whose performance reviews
depend on health outcomes, not just volume. Either way, payment alone does not create
relationships and team dynamics, and because sharing bonuses or total reimbursement
among colleagues is almost unimaginable without good working relationships, team-based
care needs to be established well ahead of payment changes. Co-location of people is a
good first step. While the impacts of prepayment for providers and clinicians remains unclear,
capitation’s success will depend on how organizations manage the changes internally. Most
organizations that are already paid via capitation still use fee-for-service payment models
internally. This is risky misalignment that can undermine profitability. Prepayment doesn’t
automatically improve value for patients. If the prepayment model guaranteed better health
outcomes that drove down total spending, integrated provider-payer organizations would
already have consistently better outcomes across many services. But tremendous variability
persists. To achieve the cost and quality objectives of prepayment, high-value care delivery
will need to become the norm. Pre-payment will reduce margins unless it is matched with
value-based strategy. While creating high-performing teams is daunting, the task is easier
when leaders celebrate the professional successes of the teams whose patients have
measurable improvements in outcomes and costs. Teams that share the cause and purpose
of improving their patients’ outcomes in measured ways will spur a cultural transformation.

Value-Based Strategy Change is hard. Transforming to value-based strategy entails

dramatic change. But the status quo is untenable. Leaders have to anticipate the anxiety
that change and uncertainty evoke. Individuals and groups will see many potential problems
that reorganization may present. But the current organization of non-teams, or of teams not
defined around value for patients and families, has bigger problems. The leadership challenge
is to hold the old approach to the same standard of critique as the new approach. Recognition
of the magnitude of current problems puts the opportunities of transformation in new light. The
logic of value-based care acknowledges that health care exists to create value for patients.
Measuring that value accelerates improvement, reduces unwarranted variation and disparities
in care, and supports the efforts of caregivers. From the perspectives of patients and families,
as well as the perspective of clinicians aspiring to excellence, measurement supports
success. Understanding the patient and family perspective on their medical circumstances
unlocks startling opportunities to create value. Starting from the patient perspective is
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relatively rare in health care, though this design-thinking approach is now common in most
sectors of the economy. Ideas will need even deeper motivation than focus group results and
analysis of patient satisfaction. Innovative care models will add services in today’s invisible
gaps, coordinate care across boundaries that currently looked impermeable, and remove
obstacles that patients face but the delivery system does not see. Value-based strategy
supports the calling of medicine to improve patients’ health. The transformation from volume
to value is not about administratively directed care and confusion. It is about caring teams
improving what matters most to their patients.

About The Authors

Elizabeth Teisberg, PhD, is a Professor of Community and Family Medicine at Dartmouth’s

Geisel School of Medicine in Hanover, New Hampshire. She is also a Senior Institute
Associate at Harvard’s Institute for Strategy and Competitiveness. Her expertise is in Strategy
and Innovation, particularly in health care delivery. Professor Teisberg wrote Redefining
Health Care: Creating Value-Based Competition on Results with Professor Michael E. Porter.
Since its publication, she has worked internationally to inspire and implement innovation for
dramatic improvement in health care value.

Scott Wallace is a Visiting Professor of Family and Community Medicine at Geisel. His
research focuses on employee health as a business strategy and on redefining chronic
disease care and transforming health care from volume-based to value-based. He
was the first CEO of the National Alliance for Health Information Technology. In 2004,
President George W. Bush appointed him as the chairman of the Commission on Systemic
Interoperability, an eleven person federal commission created to develop a national health
care IT strategic plan, holds a juris doctorate from the University of Chicago Law School,
a master’s degree with honors in business administration from the University of Chicago
Graduate School of Business and a bachelor’s degree in economics from Duke University.

References

1. Porter ME, Teisberg EO, Redefining Health Care, Boston MA, Harvard Business School
Publishing 2006.
2. Reinhardt UE, Porter and Teisberg’s Utopian Vision, Health Affairs Blog, October 10, 2006
(http://healthaffairs.org/blog/2006/10/10/health-reform-porter-and-teisbergs-utopianvision/).
3. Organizations must capture a portion of the value they create, but this issue of allocating
profits is a fundamentally different question than for whom should health care create value.
4. Wallace and Teisberg, “Measuring What Matters: Connecting Excellence, Professionalism
and Empathy,” in this special issue, discusses these outcomes during care.
5. Seven outcome measures and individual facility data compared to the national average
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and the foundation’s national goal are available at: http://www.cff.org/LivingWithCF/
CareCenterNetwork/ CareCenterData/ (no-charge registration is required to search data
fields).
6. The UNOS data are available at http://optn.transplant.hrsa.gov/converge/latestData/
advancedData. asp
7. Private communication with Rebecca Kniskern, PhD, Team Leader, Obsessive Compulsive
Disorder Academic Collaborative Team, Behavioral Medicine and Clinical Psychology
Department, Cincinnati Children’s Hospital Medical Center, Cincinnati, OH.
8. Patients were pushed to confront the symptoms of the condition.
9. Population health models, such as Accountable Care Organizations, often face huge
challenges when a newly constructed alliance expects the group to achieve results that one
might hope for from a practiced, integrated team.
10. Porter ME, Teisberg EO, and WallaceS. The Joslin Diabetes Center, HBS no. 9-710-424,
2009, REV. January 25, 2010.
11. Dartmouth Atlas of Health Care. http://www.dartmouthatlas.org/