New horizons: health care industry report 2014
Voyage to value
Prelude: Value and viability
The demand to derive greater value from health care, producing the best patient outcomes at the lowest cost, is pervasive and urgent. Compared with the rest of the world, the US spends the most money for health care. Yet our overall health is not improving, especially within the most costly patient populations — those with chronic diseases.
To close the value gap, the health care industry today has set sail on a new course. Since passage in 2010 of the Patient Protection and Affordable Care Act (ACA), where the term “value” appears prominently, the pursuit of value-based care has rapidly emerged in industry and policy discussions. The ultimate goal on the “voyage to value” is to create an economically sustainable approach to how care is delivered and how it is paid for.
Advocates maintain that costs can best be controlled by re-engineering care delivery and rewarding improved value: keeping people healthy, using medical interventions appropriately, and preventing and managing the chronic illnesses that consume a large part of our health care dollars.
In the consumer world, value is a familiar concept. Consumers tend to equate good value with products of the highest quality for the lowest price. When applied to health care, however, value is more complex, as the consumer — from patients and providers to payers and purchasers, and the product — patient outcomes, can vary widely.
According to the Institute of Medicine (IOM), an organization that has studied the issue closely, value is in the eye of the beholder, representing different things to different stakeholders:
- For health care providers, value hinges on making decisions based on appropriateness of care.
- For payers, it means using evidence-based interventions and paying based on outcomes.
- For employers, value is keeping workers and their families healthy and more productive at lower costs.
- For patients, value is having a high-quality relationship with care providers, meeting personal health goals and being assured that out-of-pocket payments are targeted to these goals.
Reconciling stakeholder perspectives in a way that creates value for all is a challenge requiring thoughtful discussion, diligent focus and unified action.
Driven by the value challenge, industry stakeholders are pursuing a variety of strategies:
- Health care providers are embracing payer incentives to deliver high-value care through such models as pay-for-performance, bundled-payments, global fees and financial-risk-sharing within accountable care organizations (ACOs).
- Payers are finding new ways to partner with providers to add value to the patient experience.
- Employers are striving to rein in rising health care premiums while pursuing affordable, high-value products and services that enhance employee health and productivity.
- Product manufacturers are investing in innovations that deliver value by improving quality of life.
- Patients are looking to access tools and transparent information that help them make the most informed value-based decisions.
In this edition of New horizons, we look at the voyage to value in health care and the course ahead in delivering on the value promise.
Considerations for your board and executive leaders
- Is value the “wind in the sails” of your organization’s mission and leadership?
- Have you defined your organization’s core value proposition and overarching strategy to succeed in a value‑based world?
- How are you building your reputation in the community as a provider of value?
- Have you developed a culture of collaboration and accountability to support value-based approaches? In what ways are your employees at every level empowered to deliver value in their daily work?
- What tools have you built into your processes for continuous feedback and action to support the voyage from volume to value?
- How do you know you are delivering the outcomes that matter to patients?