The MedTech Europe blog

What is value in healthcare?

When one of the defining minds of business education in recent years turns his attention to healthcare then people would be wise to sit up and listen. Harvard Business School guru Michael Porter first entered the impenetrable world of health policy in 2006 in a book with colleague Elizabeth Teisberg entitled ‘Redefining health care: creating value-based competition on results’. This work sets out the thesis that competition is good because all elements of the system will be encouraged to improve in an environment where performance is transparent.

All well and good you might say. But how do we measure performance? Porter has subsequently continued to try to and help define value and earlier this month threw more light on the subject in an article in the New England Journal of Medicine entitled ‘What is value in health care?’. This makes interesting reading as he identifies the lack of coherent goals between stakeholders as the key reason why health systems fail to improve performance. As he says, different players have widely differing and often conflicting goals ‘including access to services, profitability, high quality, cost containment, safety, convenience, patient-centeredness and satisfaction’. Rightly, he proposes a unifying measure of value which, in theory, should unify all of the players and allow real progress to be made in a measurable way. He defines value as ‘health outcomes achieved per dollar spent’ and espouses a holistic approach to traversing the various healthcare delivery points that interact with a patient with any particular condition.

Strikingly, Porter states that ‘since value is defined as outcomes per unit cost, it encompasses efficiency. Cost reduction without regard to outcomes achieved is dangerous and self-defeating, leading to false “savings” and potentially limiting effective care’.

The current climate in many parts of Europe for arbitrary cost-cutting exercises is dangerous. Instead the focus needs to be on true innovation which leads to Porter’s improved outcomes relative to cost. To do this, all of the stakeholders need a better mutual understanding and need to share goals. This can only arise out of better dialogue between the parties and development of methodologies suggested by Porter to inform evidence-based decision-making but not just in the clinical domain. Tough stuff but the sooner we get on with meaningful measures of performance and value the sooner we will make a dent in the sustainability challenge.

– John Wilkinson
Eucomed Chief Executive

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  1. Porter’s insightful article in the highly regarded NEJM highlights that value creation for the patient is the final and most important objective.

    Porter states succinctly: “Value for the patient is created by providers’ combined efforts over the full cycle of care. The benefits of any one intervention for ultimate outcomes will depend on the effectiveness of other interventions throughout the care cycle.”

    This raises two key issues:

    1. How are the “silos in healthcare” to be managed in a manner that productively combines the “unselfish” efforts of the major stakeholders?

    2. Who decides what are the best outcomes from each of the individual interventions and who will ensure that healthcare effectiveness and efficiency are delivered seamlessly to patients?
    (for example if a rather costly drug reduces/avoids hospitalization and also reduces absenteeism in the workplace, this could easily be the best Value for Money in the long run).

    Let us hope that the Economic Burden of Illness is better understood, analyzed and debated – leading to superior outcomes to patients, communities & countries.

    Rudy Fernandes
    Global Health Strategy Inc.,
    4296 Claypine Rise
    Mississauga, Ontario
    Canada, L4W 2G6

    “It is unwise to be too sure of one’s own wisdom. It is healthy to be reminded that the strongest might weaken and the wisest might err”.
    Mahatma Gandhi (1869 – 1948)

  2. This article was interesting in it’s progression from DIAGNOSIS to treatments, thus outcomes.
    As a patient tho? DIAGNOSIS is the KEY to optimal treatments and therein lies the flaw in this overall premise.
    Aside from cancers, some endocrine matters and some autoimmune issues? When a patient is KNOWN to have all three issues and diagnosticians do not follow-up, rather medicate to the point of non-complaint I have objection to this particular menu to follow for subsequent treatments.
    As a patient, I’ve no recourse other than to ‘shop’ specialists or get lucky! I got lucky. I was diagnosed w/in 18 months of Cancer, Thyroid AND Autoimmune issues! Most patients I’m aware of have to ‘shop’ and wait maybe 5-10 years for both diagnosis and then treatments suitable to their conditions. Usually too late to have avoided permanent damages.
    Value? IS A PERCEPTION OF QUALITY! The perception that THIS physician is doing all he/she knows to do to diagnose and THEN refer to others who mite have more experience. Many physicians do NOT refer. Thus patients get worse. QUALITY. First contact w/any professional’s offices are key as to whether I see that physician! From hold time, appointment set up times, to actual waiting times to see a physician for what? 10 minutes and be charged hundreds for the pleasure?
    That PERCEPTION and COMMUNICATION between the physician and the patient is CRUCIAL to good diagnostics and a sense of quality being provided. No ands, Ifs or BUTS!
    As the Wharton Business School published in the mid-70’s? It’s all steak without sizzle…cold damp and ickky. PERSONAL Action and INTERACTION between patients and physicians MUST improve! I myself have met too many damp steaks and they weren’t even ‘prime’ to be considered!
    Thank you for your allowing a mere patient to comment.

  3. Can health care outcomes be proxy of value?

    Value is not intrinsic to anything or anyone. Value only arises in a system as its emergence, based on self-organizing relationships; it’s a transient state. You can meaningfully measure outcomes in mechanical/linear systems but you encounter great difficulties if you attempt the same in biologic/non-linear systems.

    The generation of value is in a constant flux within any complex adaptive system, being it the human body or the larger societal health care system. When you attempt to measure health care or even one person’s health by focusing on a certain limited number of parameters, outcome indicators, the conclusions that you may arrive at are unlikely representative of the true state that you set out to measure; the innumerable system’s relationships constantly generate the elusive ever-changing positive or negative emergence/value.

    It seems that value of a biologic system is not really measurable in conventional terms as it represents the system’s emergence where the whole is greater than the sum of its parts. Some components of value can be measured but that will not give us an estimate of system’s generated value. In a linear/mechanical system the number and the relationships of components are known and fixed hence measuring each is feasible and here the whole does exactly equal the sum of its parts. Biologic systems, however, are non-linear where the number of components and their inter-relationships, for all practical purposes, is infinite, not truly knowable/controllable. The value creation in a biologic system comes out of its gestalt.

    For further discussion, please see links below:
    Janecka IP: Is the U.S. Health Care an Appropriate System? A strategic perspective from systems science. Health Research Policy and Systems 2009, 7:1
    (Highly Accessed)
    Janecka IP: Cancer control through principles of systems science, complexity, and chaos theory: A model. Int J Med Sci 2007; 4:164-173.

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