In re­sponse to the pres­sures of ris­ing costs in the healthcare sec­tor, a few pi­o­neer­ing or­gan­i­sa­tions are de­vel­op­ing a new op­er­at­ing model that we call the value-based hos­pi­tal.

Qatar Today - - INSIDE THIS ISSUE - BY JAD BI­TAR, Part­ner and Man­ag­ing Di­rec­tor, and RAMI RAFIH, Pro­ject Leader The Bos­ton Con­sult­ing Group, Dubai

In re­sponse to the pres­sures of ris­ing costs in the healthcare sec­tor, a few pi­o­neer­ing or­gan­i­sa­tions are de­vel­op­ing a new op­er­at­ing model that we call the value-based hos­pi­tal.

This fun­da­men­tally dif­fer­ent ap­proach re­lies on con­tin­u­ous im­prove­ment by mon­i­tor­ing the health out­comes of spe­cific pa­tient groups and un­der­stand­ing re­source re­quire­ments and costs in the con­text of how those out­comes are achieved along the clin­i­cal path­way. Among the lead­ing or­gan­i­sa­tions that have em­braced this ap­proach are Kaiser Per­ma­nente and Cleve­land Clinic in the US, Mar­tini-Klinik and Schön Klinik in Ger­many, and Ter­veystalo, the largest pri­vate healthcare provider in Fin­land. The vast ma­jor­ity of hos­pi­tals, how­ever, have yet to em­bark on this jour­ney. De­spite years of qual­ity man­age­ment ini­tia­tives, hos­pi­tals are decades be­hind most other in­dus­tries.

The lim­its of the tra­di­tional hos­pi­tal op­er­at­ing model

Ev­ery hos­pi­tal wants to de­liver qual­ity care in a cost-ef­fec­tive fash­ion. But the way most hos­pi­tals are or­gan­ised to­day makes that goal very dif­fi­cult – and, in many cases, nearly im­pos­si­ble – to achieve. Three or­gan­i­sa­tional char­ac­ter­is­tics stand in the way of sus­tain­able con­tin­u­ous im­prove­ment.

Func­tional or­gan­i­sa­tion. De­part­ments are or­gan­ised by med­i­cal spe­cialty: car­di­ol­ogy,

tho­racic surgery, rheuma­tol­ogy, ra­di­ol­ogy, and so on. In many hos­pi­tals, re­sources that could be shared, such as emer­gency care and in­ten­sive care are like­wise or­gan­ised into their own spe­cialty units. De­spite the high de­gree of for­mal in­ter­ac­tion among de­part­ments through re­fer­rals for di­ag­nos­tics or treat­ment, each unit is mea­sured on its own bud­get and its own or­gan­i­sa­tion­ally dis­tinct Key Per­for­mance In­di­ca­tors, mak­ing it ex­tremely dif­fi­cult to op­ti­mise the full care path­way and man­age costs in an in­te­grated fash­ion.

Nar­row per­for­mance met­rics. The prob­lems of the func­tional struc­ture are ex­ac­er­bated by the type of per­for­mance met­rics that hos­pi­tals typ­i­cally col­lect. In our ex­pe­ri­ence, most hos­pi­tals track fi­nan­cial met­rics and process met­rics (with an em­pha­sis on wait­ing times and the pro­duc­tiv­ity of in­di­vid­ual units). Some mea­sure “qual­ity,” but when they do, qual­ity is of­ten de­fined as com­pli­ance with treat­ment guide­lines (in ef­fect, process ef­fi­ciency) or as­sessed us­ing sur­veys about the pa­tient ex­pe­ri­ence. But those ap­proaches em­pha­sise ef­fi­cient through­put or sub­jec­tive ex­pe­ri­ence, not the ac­tual health out­comes de­liv­ered to pa­tients. The fact that costs for a given con­di­tion are dis­trib­uted across many dif­fer­ent

de­part­ments makes it ex­tremely dif­fi­cult to get a clear pic­ture of the whole and, there­fore, to act on costs, be­cause no­body “owns” or can man­age the trade-offs be­tween cost and qual­ity.

The man­age­ment-clin­i­cian di­vide. A highly frag­mented or­gan­i­sa­tion and met­rics that do not di­rectly ad­dress the key pur­pose of the or­gan­i­sa­tion – im­prov­ing the health and well-be­ing of pa­tients – tend to cre­ate a dis­con­nect be­tween man­age­ment and staff. This be­hav­iour in hos­pi­tals is a log­i­cal con­se­quence of the func­tional or­gan­i­sa­tion. On the one hand, hos­pi­tal ad­min­is­tra­tors, fo­cused on max­imis­ing the ef­fi­ciency of their own units through their con­trol over the bud­get and staff sched­ules, of­ten feel pow­er­less to in­flu­ence clin­i­cians, who are on the front line of care. On the other hand, highly com­mit­ted clin­i­cians of­ten feel not only that the met­rics and ob­jec­tives the sys­tem im­poses on them have lit­tle to do with pa­tient care but also that they lack the in­for­ma­tion and tools needed to re­ally make a dif­fer­ence in hos­pi­tal per­for­mance.

The ad­van­tages of the value-based op­er­at­ing model

The start­ing point of a value-based op­er­at­ing model is a com­mit­ment to col­lect and share data on the ac­tual health out­comes. Sys­tem­at­i­cally track­ing out­comes is es­sen­tial for two pri­mary rea­sons. First, de­liv­er­ing qual­ity health out­comes is the rai­son d'être of any provider or­gan­i­sa­tion. Qual­ity health out­comes are what pa­tients want from their providers and what pay­ers ul­ti­mately should fund. Sec­ond, and per­haps even more im­por­tant, not un­til an or­gan­i­sa­tion knows what kind of out­comes it is de­liv­er­ing can it be­gin to un­der­stand its true per­for­mance and what kind of value it is pro­vid­ing. Fo­cus­ing on out­comes also has a third big ad­van­tage. It pro­vides both ad­min­is­tra­tors and clin­i­cians with a whole new way to think about costs: whether the costs in­curred ac­tu­ally con­trib­ute to out­comes.

By def­i­ni­tion, health out­comes are spe­cific to a given dis­ease, med­i­cal con­di­tion, or pro­ce­dure and vary by pa­tient group. Sim­i­larly, the costs that mat­ter in the value-based hos­pi­tal are the costs per pa­tient to achieve the tar­get out­comes for a given dis­ease or con­di­tion. There­fore, the right way to track costs is not so much by each spe­cialised unit but by the ac­tiv­i­ties un­der­taken and re­sources used for a given pa­tient group across the en­tire care-de­liv­ery process. Once an or­gan­i­sa­tion has de­vel­oped a sys­tem for track­ing the cost per pa­tient in a par­tic­u­lar group of pa­tients suf­fer­ing from the same dis­ease or con­di­tion or with a sim­i­lar med­i­cal pro­file, it is in a po­si­tion to iden­tify which par­tic­u­lar costs drive qual­ity out­comes and which do not.

The com­bi­na­tion of new vis­i­bil­ity about out­comes and costs per pa­tient group with across-the-board en­gage­ment on the part of clin­i­cians cre­ates the con­text for a new kind of be­havioural dy­nam­ics in the hos­pi­tal. New health-out­comes data and cost data that to­gether pro­vide an in­te­grated per­spec­tive across the en­tire care-de­liv­ery value chain. These data also make it pos­si­ble to align the clin­i­cal goal of de­liv­er­ing high-qual­ity care with the man­age­rial goal of de­liv­er­ing that care as cost-ef­fec­tively as pos­si­ble. Put sim­ply, clin­i­cians in this con­text find that it is in their in­ter­est to co­op­er­ate with one another and with man­age­ment in a gen­uine part­ner­ship in which each takes joint re­spon­si­bil­ity for pro­vid­ing qual­ity out­comes in a cost-ef­fec­tive fash­ion.

In some cases, a provider or­gan­i­sa­tion will fo­cus on be­com­ing an in­ter­na­tional leader in treat­ing a spe­cific con­di­tion that of­ten re­quires highly spe­cialised care; for in­stance, prostate can­cer. Providers that use this strat­egy lever­age their depth of ex­pe­ri­ence in clin­i­cal-prac­tice R&D, ex­cel at sys­tem­at­i­cally driv­ing out­comes im­prove­ments that mat­ter for pa­tient groups, and in­crease vol­ume by at­tract­ing new pa­tients who want the high­estqual­ity out­comes. In other cases – for ex­am­ple, chronic dis­eases such as di­a­betes or con­ges­tive heart fail­ure – providers will strive to be­come in­te­grated-ser­vice in­sti­tu­tions that take re­spon­si­bil­ity for the en­tirety of pa­tient health in a given pop­u­la­tion across pri­mary, sec­ondary, and in some cases ter­tiary care. The in­te­grated providers will man­age the pop­u­la­tion for max­i­mum healthcare value and will, to a large ex­tent, man­age their own in­te­grated care chains. But they will also act as bro­kers, help­ing their pa­tients nav­i­gate to the best in­de­pen­dent providers, which align their ap­proaches with the in­te­grated providers' sys­tems and of­fer unique ca­pa­bil­i­ties.

Once a hos­pi­tal has the right pa­tient­fo­cused met­rics in place and an en­gaged clin­i­cal staff op­er­at­ing on the ba­sis of ef­fec­tive pro­cesses for care re­design, it is also in a po­si­tion to iden­tify its ar­eas of strength and lever­age those strengths to es­tab­lish its com­pet­i­tive dif­fer­en­ti­a­tion in the rapidly chang­ing healthcare mar­ket­place

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