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Where's the Value in Healthcare?

John Morrow, for HealthLeaders Media, January 23, 2009

There is plenty of discussion among the consumer-driven health crowd about where one's "medical home" resides these days. Is it part of an integrated delivery system or an institutional entity, such as a mission-driven community hospital? Is it a local doc in the box or urgent care center? Some even think a health information Web site, like WebMD, or an extended social network of family, friends, and experienced patients, could function as a medical home.

So what makes us, as consumers, seek out and want to have different solutions to meet our healthcare needs and provide that medical home? It could be our level of experience, lack of standards, or belief—based on the variability in the delivery of care—that there is no system in healthcare.

Or it could be that the current leaders in healthcare are not who you think. The "real" health leaders are not C-suite executives at your local hospital or physicians and caregivers—they are empowered consumers.

Today's health leaders are the moms and dads who are struggling to navigate the healthcare system. These consumers are doing their best to lead their family through crisis, chronic condition, and routine cold and flu without the benefit of a healthcare provider taking the lead to coordinate their family's care.

But is it really about coordination of care, or is about the lack of confidence that we as consumers have in the system? As consumers, we understand convenience, service levels, quality, price, and satisfaction of experience. We call this "value for money", and it's ingrained in everyone who makes purchases.The new C-suite—healthcare consumers—is searching for value in the care that they buy.

In the book, Redefining Health Care, authors Michael E. Porter and Elizabeth Olmsted Teisberg define healthcare value as "outcomes per dollar." Even though people can debate whether an outcome is experience, satisfaction, death, or a safety event, we can all agree that the "per dollar" part is really clear.

Everyday consumers make value judgments based upon what matters most to them. They do this with calling plans, travel destinations, and service ratings that help them make decisions. These new empowered consumers are the ones creating value by defining value. Today, absent anyone noticing, consumers will draw their own conclusions and vote with their feet and wallet.

Institutional healthcare leaders should get off the "quality is king" bandwagon and realize that enormous volumes of care are given daily that have minimal impact on quality or outcomes. It's not just about quality; it's about convenience, experience, satisfaction, preference, perception, and yes, it's about the out-of-pocket price consumers pay. When healthcare leaders get on the track and begin to follow the warnings from the Centers for Medicare & Medicaid Services that value-based purchasing is just around the corner, we'll finally start to hear how they are helping consumers find value. That is a community benefit that you can sink your teeth into.

So, how can institutional healthcare leaders better serve the new C-Suite (or consumers)?

  • Transparency: Develop a philosophy of transparency for performance reporting.
  • Value: Understand your value equation (outcomes per dollar) and publish it!
  • Metrics: Measure differences in price, convenience, perception, satisfaction, and outcomes. Adjust your service offerings based on what works.
  • Communication: Formulate a communication strategy that helps consumers understand the complexity of your offerings; then, streamline the message and publish it.
  • Be a Consumer: Spend a day as a consumer in your own facility—take public transportation to get there; walk into the emergency room and ask for care; ask the admissions department about the cost of basic services; analyze how helpful your employees really are, and poll other patients in the waiting room about their wait time and levels of confusion.

Delivering value is about the big picture—not just quality or good food or friendly staff. And if you don't think the current economy will put new pressures on your facility's value equation, think again.

John Morrow is a health ratings innovator who has spent his career helping hospitals, consumers and payers improve their value proposition by benchmarking performance. He most recently created the Hospital Value Index® with Data Advantage and was the founder of 100 Top Hospitals: Benchmarks for Success® while at HCIA (now Thomson-Reuters).
3 comments on "Where's the Value in Healthcare?"


steve (2/4/2009 at 3:42 PM)
Value is elusive. and quality is not definable other than by those who deliver the service. Most of us can measure value. Healthcare really does not want value because that would involve utilizing customer service concepts that are in general alien to both physician practices and hospitals. But if you put a dollar figure on services that customers have to pay you will achieve value judgments more quickly. Transparency, communication and metrics are not customer receptive concepts. See www.healthcaresoundoff.com for a system suggestion that might get us to the value proposition quickly. Value needs customer skin in the game.

dclaybrook1 (1/28/2009 at 3:19 PM)
I really appreciate the five strategies as a health information management consultant. I truly believe we need more transparency, better value better communication etc. I was just recently in the hospital myself so I was the patient. I tried to negotiate price with a hospital and it is a joke. I was going to a great doctor and I had all kinds of test completed. I knew that this particular physician was out of network but it was worth it because I liked her. The real problem arose when I found out that she did not have any privileges at my in Network hospital provider. I wrote letters and called several of the out of network providers that she had privileges with and they gave me the run around. The final story was that I could pay the out of network providers out. No savings and no negotiating were done. They were not really interested in conducting the same surgery for what my IN net work provider would do it for or if they were interested, they wanted their money up front. The health care patient or consumer as we call them does not really have much to say about the situation. The system is locked tight and the communication is not really there yet. I like what you said about: Metrics: They need to measure differences in price, convenience, perception, satisfaction, and outcomes. Adjust your service offerings based on what works. And they need to work on Communication: They need to formulate a communication strategy that helps consumers understand the complexity of your offerings; then, streamline the message and publish it. I had to hunt high and low and all I found was a manager who told me this is way it is. Like it or lump it.

doccottle1 (1/27/2009 at 7:39 PM)
Value, per the Harvard authors referred to, is the inarguable coin of the future, and well designed IT systems, including comparisons and free market pressures, the wave of the near future. Getting onto that bandwagon would seem to make sense, but at the grass roots physician level, about 2/3 of patient visits still come thru word of mouth, or referrals from other docs. The problem, then, is that the structure is tipping inexorably over from the top, and the providers at the bottom are still thinking that the pyramid is as stable as ever. It's time that American physicians at large appreciate what the general public is much more rapidly adopting: IT in daily life, and the inevitable commoditization of at least some critical aspects of health care.