0. Value Based Health Care A Practitioners’ Perspective
The Need For Change
A Practitioners’ Perspective
Health Care Conference Aruba
June 1-4, 2017

1. Agenda My Personal Journey The Need For Change Value Measuring Costs
Where To Go From Here

2. Born and Raised in Indonesian Papua

3. Indonesian Papua
Papua, Indonesia

4. Six deployments to Afghanistan and Africa
Military Surgeon
Six deployments to Afghanistan and Africa

5. Reducing Colonic Anastomotic Leakage

6. Together We Go Further
Value Based Health Care Analytics Achieve larger scale results than the colonic anastomosis leakage reduction project Together

7. Agenda The Need For Change My Personal Journey Value Measuring Costs
Where To Go From Here

8. PROBLEM?

9. Lenses Stakeholders Medical Patients Legal Medical staff Political
Hospitals
Insurance
Industry

10. Patient
Doctor
Insurance

11. Agenda Value My Personal Journey The Need For Change Measuring Costs
Where To Go From Here

12. The Elements of Value, HBR 2016
“When customers evaluate a product or service, they weigh its perceived value against the asking price.”
The Elements of Value, HBR 2016

14. Costs of delivering the outcomes
Naples
1/8/2018
Value-based health care delivery (VBHC)
The central goal in health care must be value for patients, not access, volume, convenience, quality, or cost containment
RSK: Good, a clean, clear, powerful slide of our organizing framework.
Outcomes= quality, costs+efficiency
Goal of Value
To have a high value system, have to set value as the goal: value = health outcomes/cost
Most organizations have alternate goals:
Profit/operating surplus
Community service
Everyone wants to do everything, based on historical role of hospitals in times where much less could be done for patients
Access is different than value
Volume is different than value
Shifting costs to patients does not = value
Cost containment
Setting cost reduction as a goal is a trap/toxic approach
Only drives up costs because the “discretionary” services to be cut are among the highest-value, e.g., prevention, screening, consultation, and education
Administrative costs are not the main issue; regardless of estimate used, the vast majority of costs are for delivering services and administrative costs driven by the existing organizational model
Much of administrative costs are due to structure of delivery
Total cost is not just cost borne by insurer or individual provider or even the system as a whole
Additional costs to families, employers, etc.
Cost is total cost to system and society
“Internalize” costs to get better choices in terms of value (like sick days in Germany)
Must objectively measure value – health outcomes , costs (not charges)
International:
Finland
Excellent focus on primary care – need to work on models to integrate PC with specialty
Disease management – DEHKO new clinical practices in centers screen and give lifestyle counseling around Diabetes
Specialty care – inpatient and outpatient services are integrated
Fragmentation because each hospital district aims to provide comprehensive services
Health outcomes
Value =
Costs of delivering the outcomes
The “unit of analysis” for VBHC is the complete cycle of care for treating a patient’s medical condition.

15. (Health) Outcomes Medical results Costs
Patient experience = treat them how they want to be treated
Provider experience

16. Agenda Measuring Costs My Personal Journey The Need For Change Value
Where To Go From Here

17. Problems With Measuring Costs In Health Care Today
We know what it costs to run a department / hospital, not what it costs to treat a condition
Budget thinking versus process thinking
Finance and medical don’t communicate with each other

18. Time-Driven Activity-Based Costing (TDABC)
Determine the Care Process
What activities are performed over the care cycle for a medical condition?
Who is performing each activity?
How long does each activity take? 1
What is the cost per unit of time for each type of personnel?
Calculate Cost Rates 2
What materials, supplies, and drugs are consumed during the care cycle?
Account for Consumables 3

19. Value Based Health Care: The Agenda For Change

20. Where To Go From Here? Depends on your role Depends on your challenges
Depends on your goals

21. Conclusions There is a need for change
Value is in the eye of the beholder
What needs to change depends on your circumstances
Measure costs over care cycle and not by departments (process thinking)
Tools are available, so do not reinvent the wheel

22. Thank You