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

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

Born and Raised in Indonesian Papua

Indonesian Papua Papua, Indonesia

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

Reducing Colonic Anastomotic Leakage

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

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

PROBLEM?

Lenses Stakeholders Medical Patients Legal Medical staff Political Hospitals Insurance Industry

Patient Doctor Insurance

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

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

Costs of delivering the outcomes 2011-03-17 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.

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

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

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

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

Value Based Health Care: The Agenda For Change

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

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

Thank You gerrit@avantgardehealth.com