1. Value-Based Health Care Delivery: Creating an Action-Research Agenda
Professor Michael E. Porter
Harvard Business School
START
July 15, 2014
This presentation draws on Porter, Michael E. and Thomas H. Lee. “The Strategy that Will Fix Health Care,” Harvard Business Review, October 2013; Porter, Michael E. with Thomas H. Lee and Erika A. Pabo. “Redesigning Primary Care: A Strategic Vision to Improve Value by Organizing Around Patients’ Needs,” Health Affairs, March 2013; Porter, Michael E. and Robert Kaplan. “How to Solve the Cost Crisis in Health Care,” Harvard Business Review, September 2011; Porter, Michael E. “What is Value in Health Care” and supplementary papers, New England Journal of Medicine, December 2010; Porter, Michael E. “A Strategy for Health Care Reform—Toward a Value-Based System,” New England Journal of Medicine, June 2009; Porter, Michael E. and Elizabeth Olmsted Teisberg. Redefining Health Care: Creating Value-Based Competition on Results. (2006) Additional information about these ideas, as well as case studies, can be found at the Institute for Strategy and Competitiveness Redefining Health Care website at No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means — electronic, mechanical, photocopying, recording, or otherwise — without the permission of Michael E. Porter and Elizabeth O.Teisberg.

2. Timeline
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
Slide created 7/15/2014

3. Competition in U.S. Health Care
Competition to shift costs or capture greater revenue
Competition to capture patients and restrict choice
Competition to increase bargaining power to secure discounts or price premiums
Competition to exclude less healthy individuals
Competition on the wrong things leads to a zero-sum competition with no or negative value
Notes adjusted 5/22/14
Health care costs continue to rise much faster than GDP. There is the ongoing fear that health care is and will continue to threaten American businesses, reduce our wages, and cripple our government
Elizabeth and I studied the system, thinking that the underlying problem was a lack of competition
But what we found was not a lack of competition, but the wrong kind of competition
For 20 years, HC costs have continued to rise, and a larger and larger share of our government debt is focused on health care
Now, we face even more competition from firms globally who have cheaper health care and cheaper wages 3

4. Timeline
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
Slide created 7/15/2014

5. 2012.11.21 - Value Measurement Core Concepts
4/22/2017 9:58 PM
Solving the Health Care Problem
The core issue in health care is value for patients
Value =
Health outcomes that matter to patients
Costs of delivering the outcomes
Delivering high and improving value is the fundamental purpose of health care
Value is the only goal that can unite the interests of all system participants
Improving value is the only real solution versus further cost shifting, restricting services, or dramatically reducing the compensation of health care professionals
(Slide revised 5/17/14
(Revised )
Framing: Can solve healthcare problem without a big pay cut. Journey to get started on
HC companies can no longer succeed at expense of patient
Difference from past reforms: Value as compass
Value is not cost-effectiveness. Cost-effectiveness is only narrowly focused solution. Value framework needed to appreciate big picture.
Improving value is the best means to social justice- every patient’s results counts
You must move from the ideas of access, volume, and equity to value as the key goal
Delivery issues are universal across the world
Best way to equity is focus on value; access isn’t value
Aging population will lead to even more demand for services, even if we do achieve universal coverage
Now more than ever, have to get more for the dollars we’re spending
If not, based on other countries’ experiences, we’ll start rationing care one way or another
This is a universal problem, not US problem (Germany same issues)
What kind of a health care system do we want, vs. how to make the current system a little better
In a random sample of 1,004 U.S. adults, 8 of 10 respondents agreed that the nation's health care system needs either fundamental change or complete rebuilding.
Source: "Public Views on U.S. Health System Organization: A Call for New Directions", The Commonwealth Fund Commission on a High Performance Health System, August 7, 2008/ Volume 11http://

6. Creating a Value-Based Health Care Delivery System The Strategic Agenda
Organize Care into Integrated Practice Units (IPUs) around Patient Medical Conditions
For primary and preventive care, organize to serve distinct patient segments
Measure Outcomes and Costs for Every Patient
Move to Bundled Payments for Care Cycles
Integrate Care Delivery Systems
Expand Geographic Reach and Serve Populations
Build an Enabling Information Technology Platform
Slide revised 5/16/2014
General Notes:
Transform and restructure delivery of care
Everything is already happening!
Somewhere
Someplace
In multiple organizations
The strategic agenda applies to every advanced economy system, and to developing countries with some additions
BM NOTES:
IPU is a new word:
On a small scale the acute stroke care developed in North London. Hyperacute stroke care units to manage the initial presentation of strokes. In these units there were collection of allied healthcare personnel who were highly skilled in giving care to stroke patients.
In the USA, MD Anderson cancer center has a good example of an IPU centered around head and neck cancer care, and of note they had psychologists and social worker as an integral part of the team
Outcomes and cost:
Outcomes based costing is being developed in Oxford with the COBIC (Capitated and Outcome-Based Incentivized Contract) project focused on mental halth, maternity services and frail elderly.
Another example is the COBIC in Bedford which is working for musculoskeletal services
Bundle payments and geographic reach is not quite present in the UK, in the USA the Cleveland clinics do well with geaographic outreach.
In terms of integrated care delivery systems, the Greenwich example may be used
Encourage services to work together effectively and provide better support at home and earlier treatment in the community
Goal – managing demand on emergency services in hospital or care homes.
Example Greenwich
Nurses, social workers, OTs and PTs working together
Multidisciplinary response to emergencies arising within the community
2.5 yr. period 2000 admissions AVIOIDED and estimated 1million pounds saved
IT is contentious topic in terms of great tax payer expense for a failed system…on the positive side the GP’s have a good system, but the important issue with IT is that has to be enabling, designed for the value based agenda. The University Hospitals of Birmingham (UHB) is a good example of an enabling system for its use.
UHB Developed a decision support tool for frontline clinicians looking at Prescribing Information and Communication System (PICS). Results were that all errors were reduced by 66%, number of missed doses were reduced.

7. Value-Based System Agenda
Getting Unstuck
Legacy System
Value-Based System Agenda
1 Organized Around Specialties and Departments, with Private Practice Physicians
2 Measures Process Compliance and Charges 3
Fee-For-Service Payments Based on Volume of Services Delivered
4 Each Hospital or Service Offers a Full Line of Services
5 Providers Limited to Serving their Immediate Geographic Area
6 Siloed IT Services for Functions, Services, and Departments
1 Organize into Integrated Practice Units (IPUs)
2 Measure Outcomes and Cost For Every Patient
3 Move to Bundled Payments for Care Cycles
4 Integrate Care Delivery Systems
5 Expand Geographic Reach
6 Build an Integrated Information Technology Platform
Slide Updated 5/22/14 – Formatting updated

8. Timeline
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Slide created 7/15/2014

9. Value Based Health Care Case Studies
Case Study
Medical Condition
Location
Specialty IPUs
Primary Care
Outcome Measure-ment
TDABC
Bundled Pricing
System Integration
Geographic Expansion
Role of Payors
MD Anderson Cancer Center: Interdisciplinary Cancer Care
Head and Neck Cancer, Endocrine Cancer
Houston X
The West German Headache Center: Integrated Migraine Care
Migraine
Germany
Commonwealth Care Alliance: Elderly and Disabled Care
Primary/ Preventative Care
Boston
Pitney Bowes: Employer Health Strategy US
Ledina Lushko: Navigating Health Care Delivery
Adrenal Cortical Carcinoma
Chicago
Michelin Employee Health Strategy*
Diabetes Care
South Carolina
The Joslin Diabetes Center
Gastroenterology Care at Sweden’s Highland Hospital
Inflammatory Bowel Disease
Sweden
Great Western Hospital: High-Risk Pregnancy Care
High-Risk Pregnancy UK
Brigham and Women's Shapiro Cardiovascular Center
Cardiovascular Care
Martini Klinik: Prostate Cancer Care
Prostate Cancer
Dartmouth-Hitchcock Medical Center: Spine Care
Spine Care NH
Schon Klinik Eating Disorder Care
Eating Disorders
The “Smartcard” is not used to its fullest ability to track and aggregate patient data
* This case was prepared by Elizabeth O. Teisberg, Professor, The Geisel School of Medicine at Dartmouth and Scott Wallace, Visiting Professor,The Geisel School of Medicine at Dartmouth.

10. Value Based Health Care Case Studies – continued
Case Study
Medical Condition
Location
Specialty IPUs
Primary Care
Outcome Measure-ment
TDABC
Bundled Pricing
System Integration
Geographic Expansion
Role of Payors
UCLA: Kidney Transplantation
ESRD, Kidney Transplantation
Los Angeles X
In-Vitro Fertilization: Outcomes Measurement
Infertility, IVF US
Boston Children’s Hospital TDABC
Plastic, Oral and Orthopedic Surgery
Boston
Schon Klinik: Measuring Cost and Value
Total Knee Replacement
Germany
Sun Yat-Sen Cancer Center: Breast Cancer Care in Taiwan
Breast Cancer
Taiwan
Global Health Partner: Obesity Care
Obesity, Bariatric Surgery
Sweden
The Cleveland Clinic: Growth Strategy
Health System
Cleveland
ThedaCare: System Strategy
Wisconsin
Children's Hospital of Philadelphia: Network Strategy
Philadelphia Region
Reconfiguring Stroke Care in North Central London
Stroke UK
The “Smartcard” is not used to its fullest ability to track and aggregate patient data

11. Timeline
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
VBHCD Intensive Seminar at HBS
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
Slide created 7/15/2014

12. Value Based Health Care Delivery Courses and Lectures for Executives
Harvard Courses
– Intensive Seminar in Value-Based Health Care Delivery (1 week full-time)
Total of 602 participants
– Leadership Workshop on Strategy for Health Care Delivery (2 days)
Total of 381 participants
– Partners HealthCare Value Based Health Care Seminar for Residents and Fellows (3 days)
Total 200 participants
– Value Measurement in Health Care (2 days)
Total of 333 participants
External Courses
– Health Care Innovation (University of Virginia, ~450 total participants)
– Executive Workshops (Brigham and Women’s Hospital, St. Francis Hospital, Hoag Hospital, Baylor Health, G.E., Cigna, Humana… total of ~900 participants)
– Global Health Delivery (Harvard School of Public Health, ~80 participants)
– Medical Care and the Corporation (Dartmouth, ~150 participants)
– Health Care Management (University of Virginia, ~100 participants)
– UCLA Strategy for Health Care Delivery (~90 participants)
– Medicaid Leadership Institute (85 participants)
June 2011 – Strategy for Health Care Delivery: United Kingdom (80 participants)
March 2012 – AAOS Enhancing Value in Musculoskeletal Care Delivery (125 participants)
Fall – Dartmouth Masters in Health Care Delivery Science (50 participants)
Fall 2013 – Executive Workshop Philips Health Care (70 participants)
Spring 2014 – Value Based Delivery Leadership Program: Texas Medical Center (83 participants)
Revised 1/15/2014 at 12:09 pm
Talking points:
Look, we’ve done a lot so far. We’ve taught these cases to over 2,000 people, including nearly 200 this past week and a half. That’s a small army. But we need more like 2 million to make this transformation happen
We can try to do this ourselves, but it’s going to be a lot easier if we have other “captains” out in the field marshaling new soldiers to the cause
We really feel this is at the tipping point
We know how to solve this problem
You all have been here for a week, we’ve sufficiently brainwashed you
Now we need you to go out and spread the word

13. Timeline
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
Slide created 7/15/2014

14. Timeline
Collaboration with Bob Kaplan Begins,
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
Slide created 7/15/2014

15. Timeline
Collaboration with Bob Kaplan Begins,
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 7/15/2014

16. Timeline
Collaboration with Bob Kaplan Begins,
Value Based Health Care Seminar for Residents and Fellows
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 7/15/2014

17. Timeline
Collaboration with Bob Kaplan Begins,
Value Based Health Care Seminar for Residents and Fellows
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 7/15/2014
Value Measurement Executive Course

18. Timeline
Collaboration with Bob Kaplan Begins,
Value Based Health Care Seminar for Residents and Fellows
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
ICHOM is founded
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 7/15/2014
Value Measurement Executive Course

19. Timeline
“Redefining German Health-Care” (with Clemens Guth)
Collaboration with Bob Kaplan Begins,
Value Based Health Care Seminar for Residents and Fellows
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
ICHOM is founded
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 7/15/2014
Value Measurement Executive Course

20. Timeline
“Redefining German Health-Care” (with Clemens Guth)
Collaboration with Bob Kaplan Begins,
Value Based Health Care Seminar for Residents and Fellows
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
ICHOM is founded
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 5/22/14
Value Measurement Executive Course
“Redesigning Primary Care” (Health Affairs)

21. Timeline
“Redefining German Health-Care” (with Clemens Guth)
Collaboration with Bob Kaplan Begins,
Value Based Health Care Seminar for Residents and Fellows
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
ICHOM is founded
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“Redefining Global Health-Care Delivery,” (with Jim Yong Kim and Paul Farmer, The Lancet)
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 5/22/14
Value Measurement Executive Course
“Redesigning Primary Care” (Health Affairs)

22. Timeline
“Redefining German Health-Care” (with Clemens Guth)
Collaboration with Bob Kaplan Begins,
Value Based Health Care Seminar for Residents and Fellows
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“The Strategy to Fix Health Care,” (with Thomas Lee, HBR)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
ICHOM is founded
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“Redefining Global Health-Care Delivery,” (with Jim Yong Kim and Paul Farmer, The Lancet)
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 5/22/14
Value Measurement Executive Course
“Redesigning Primary Care” (Health Affairs)

23. Timeline
“Redefining German Health-Care” (with Clemens Guth)
Collaboration with Bob Kaplan Begins,
Value Based Health Care Seminar for Residents and Fellows
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“The Strategy to Fix Health Care,” (with Thomas Lee, HBR)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
ICHOM is founded
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“Redefining Global Health-Care Delivery,” (with Jim Yong Kim and Paul Farmer, The Lancet)
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 5/22/14
Value Measurement Executive Course
“Redesigning Primary Care” (Health Affairs)
“How to pay for Health Care” (with Bob Kaplan)

24. Timeline
“Redefining German Health-Care” (with Clemens Guth)
Collaboration with Bob Kaplan Begins,
Value Based Health Care Seminar for Residents and Fellows
Redefining Health Care: Creating Value-Based Competition on Results. (with Elizabeth Teisberg)
“The Strategy to Fix Health Care,” (with Thomas Lee, HBR)
“What is Value in Health Care?” (NEJM)
VBHCD Intensive Seminar at HBS
ICHOM is founded
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
“Redefining Competition in Health Care” (HBR)
The Global Health Delivery Project is founded with Dr. Jim Yong Kim
“Redefining Global Health-Care Delivery,” (with Jim Yong Kim and Paul Farmer, The Lancet)
Health Care Leaders Strategy Course, HBS
“How to Solve the Cost Crisis in Health Care,” (with Bob Kaplan, HBR)
Slide created 5/22/14
Value Measurement Executive Course
“Redesigning Primary Care” (Health Affairs)
“How to pay for Health Care” (with Bob Kaplan)