15 Jul 2013  Research & Ideas

Five Imperatives for Improving Health Care

Leaders from Harvard's medical and business schools are exploring ways to improve health care delivery. In a new study, their Forum on Healthcare Innovation delivers five key imperatives.

 

Innovation in health care treatment seems to far outpace innovation in health care business management. Just ask President Obama—two weeks ago he delayed enactment of a key provision of the new health care law for fear its requirements would swamp small-business owners.

So results of a recent conference and survey from Harvard's business and medical schools may prove particularly timely. Delivered by the Forum on Healthcare Innovation, which was formed last year with encouragement from the respective deans of the two institutions, the report makes five recommendations for how to improve quality, reduce costs, and, consequently, increase value in the American health care industry.

To kick off its work, the Forum in November 2012 hosted its inaugural conference, entitled "Healing Ourselves: Addressing Healthcare Innovation Challenge," which brought together some 125 health care experts including executives, policy makers, and academics. In association with the conference, the Forum launched an HBS and HMS Survey of Executive Sentiment in Health Care.

"There's a lot of activity that goes on in health care that doesn't necessarily contribute to overall value"

"We were not asking those executives to provide objective information about their own organizations or specific numbers; rather, we simply wanted to capture where the industry feels most optimistic and pessimistic about delivering value," explains Robert S. Huckman, Albert J. Weatherhead III Professor of Business Administration at HBS and a member of the Forum's faculty steering committee.

Other committee members include William W. Chin, Executive Dean for Research at HMS; Richard G. Hamermesh, MBA Class of 1961 Professor of Management Practice at HBS; Barbara J. McNeil, Ridley Watts Professor of Health Care Policy at HMS; and Joseph P. Newhouse, John D. MacArthur Professor of Health Policy and Management at Harvard University.

The key findings from the conference and survey are detailed in the Forum's recent report, 5 Imperatives: Addressing Healthcare's Innovation Challenge, and discussed below:

Making value the central objective: Regarding the current quality of US health care, survey respondents expressed varied sentiment: 14 percent were "strongly positive," 20 percent "strongly negative," and the rest somewhere in between. But adding cost to the mix of issues changed their sentiments considerably.

Asked about the prospects for cost and quality of health care in the US, 22 percent felt strongly negative and only 1 percent felt strongly positive. "It was pretty stark," Huckman says. "The concern is that the costs have become so great that anything we do to improve quality becomes almost irrelevant if we can't finance the system to deliver it."

Hence the imperative to focus on value, the quality of outcome achieved per unit of cost spent by the system.

Researchers want to improve the business management of health care"There's a lot of activity that goes on in health care that doesn't necessarily contribute to overall value," Huckman says. "Think about a company that runs very profitable hospitals. Are they profitable because they've figured out how to offer high quality care at low cost? Or are they profitable because they've figured out that specific types of procedures tend to be reimbursed very well by insurance companies, and they've set themselves up to do a lot of those particular procedures?

"Those are two different scenarios, and we'd like to see more of the former than the latter."

Promoting novel approaches to process improvement: Although health care innovation efforts traditionally have focused on new products such as drugs and devices, survey respondents ranked process improvements in care delivery as the most promising opportunity for improving the cost and quality of health care.

"A lot of hospitals have been running the same way for the last 30 years. We want providers to look at their processes for activities, such as running an operating room, discharging patients, or conducting physician rounds, and figure out cost-effective ways to improve upon them," Huckman says.

Making consumerism really work: In contrast to process improvement, "consumer incentives to encourage healthy behavior" ranked last among 11 possible innovations in terms of its ability to increase value in health care, according to survey respondents. The reason: Incentives aren't effective unless paired with good information. And the oft-fragmented nature of the American health care system makes it hard to turn patients into active consumers.

"A lot of hospitals have been running the same way for the last 30 years"

At the conference, attendees agreed that a few things need to happen to help patients to make informed choices. All agreed that it's critical to encourage consumers to pursue healthier lifestyles. But just as importantly, patients also need better access to data on both the cost and potential outcome of specific medical procedures. Moreover, they need a mechanism for understanding that data.

"Let's face it," Huckman says. "We've long had our clinical decisions in the hands of physicians who have had, in most cases, at least seven years of post-baccalaureate medical training. These are often technical decisions that can be very nuanced. So how do we help consumers have a role in the decision-making when the information is so complex? The key is not just to get the information to the consumers but to help them process it."

Decentralizing approaches to problem solving: Conference attendees and survey respondents generally applauded the fact that health care delivery is becoming more decentralized—with care delivery spreading beyond traditional facilities and into new models such as the MinuteClinic, a for-profit provider that operates some 640 clinics inside CVS pharmacies.

"So much of health care has grown up around centralized organizations," Huckman says. "Now what we're seeing in all sectors of health care is some movement away from these centers and toward the periphery. So instead of people going to the downtown medical center they might go to a retail clinic. They might increasingly have their care monitored from home. In its most extreme form, patients may actually become their own providers with respect to many issues."

Integrating new approaches into established organizations: Still, survey respondents stressed the importance of established firms and hospitals in fostering innovation—especially in the areas of disease management, pharmaceuticals, electronic medical records, and basic research.

"We can't just wait for decentralized approaches to come and save us," Huckman says. "At some point we need to go to the large medical centers, group practices, and pharmaceutical firms to figure out how to integrate these new ideas into existing organizations."

Efforts continue

Improving health care delivery is also the main agenda of the HBS Healthcare Initiative, a multidisciplinary research effort. It is one of several big societal issues specifically studied at the School, where researchers are exploring ways that business management expertise can be harnessed to improve everything from delivering affordable essential services to the poor to making the US more competitive in world markets.

In the future, the Forum on Healthcare Innovation will turn to the five imperatives as a guide for evaluating new ideas and reevaluating existing processes. In the meantime, the group rests assured that the cure for health care does not hinge on a single magic bullet.

"At the end of the day, the big idea is that there's no big idea," Huckman says. "It's about a lot of little things—many of which we already know—that we need to execute consistently."

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Comments

    • Kevin Riley
    • Found, modelH.org, Kevin Riley & Associates | Business Model Innovation for Healthcare

    Carmen, great article!

    We at modelH totally agree that "THERE'S A LOT OF ACTIVITY THAT GOES ON IN HEALTH CARE THAT DOESN'T NECESSARILY CONTRIBUTE TO OVERALL VALUE".

    That is why we are trying to do something about it.

    modelH is a dynamic collaboration between Kevin Riley & Associates, Innovation Excellence, Batterii and healthcare innovators from around the world that has come together for a year-long project focused on building a foundation for new business models in healthcare. Our goal is to co-create an open-source business model canvas that aplies specifically to the US healthcare system. The results of the project will be compiled into a book by Kevin Riley for release in 2014.

    Learn more here: http://www.modelh.org/abouth.htm

    And please join us - we could really use your insight! http://bit.ly/modelH_joinup

    Kevin

     
     
     
    • Linda
    • business writer, Essential Solutions Corp.

    I am not in the healthcare industry; I am simply a consumer of the healthcare system from time to time. I think there can be no improvement in lowering the cost of healthcare until those costs are transparent to consumers. When I go to a healthcare facility for some sort of treatment, I have no idea how much that procedure will cost. I have no means to compare that facility's cost to another facility down the street. That gives me no incentive to care about cost...until the bill (and sticker shock) arrives in the mail.

    I agree with the premise of making value a central object of care, but the consumer/patient must know the cost of care to judge the value of it.

     
     
     
    • Leeza
    • Executive

    My two cents are--on one hand people are being encouraged to adopt healthier lifestyles on the other hand our food resources are totally not in line with the ultimate goal. On one hand president's wife is pledging for childhood obesity on the other hand the president shakes hand with Monsanto.

     
     
     
    • Brady Johnson
    • Student entrepreneur, Tulane University

    The first imperative needs to focus on "patient value."

    The patient is at the center of the care provided, and thus the value they gain must be emphasized.

     
     
     
    • Clifford Baker
    • Chair, Neffel Corporation

    I believe it is most difficult to change the leadership mind-set of any business that provides an essential service to the well-being of its customers and society in general, from profit motivation to customer value.

    This is seen not only in health care. In a world that is completely dependent upon oil as the moving and sustaining essential element of economy, the greed manifest in the production, sale, and trade of this commodity, I think, proves the ideation.

    To move the impetus of health care from a focus on specific types of procedures that tend to be reimbursed very well by insurance companies (or profit only in general), would require an ethical and moral shift in the attitude, focus, and practice of business leadership, investors, and politicians.

    I believe teachers at all levels of education to be the ones able to institute such change.

     
     
     
    • Kapil Kumar Sopory
    • Company Secretary, SMEC(India) Private Limited

    Healthcare has to be a top priority for everyone - firstly the consumer and simultaneously the provider. And the role of the State as a regulator is very important. Timely healthcare and as low ( without compromising on quality) cost as possible needs to be of concern to those engaged in the connected activities. Mortality due to non-availability of proper healthcare in various countries is at an alarming level. During natural calamities, the situation worsens. It is high time every one gets medical aid without any problem - free-for-all heathcare is what ultimately the world needs to plan for.

     
     
     
    • Carl P.
    • Learning & OD Consultant

    Health care as it stands, has become ubiquitously associated with cost: as it relates to provision of care; and assignment of costs provided/incurred. Naturally, the health care system needs to evolve; and the promotion of "business principles" as a basis and/or integrated "standard of delivery" - should already be an accepted practice (short/long-term). Accordingly, the "five imperatives" model asserted can/will provide a possible framework for the future of health care improvement and the examination of: what the system is now and what it should be - look like in the future.

    In direct regard to the Five Imperatives position: most of the areas classified are intertwined functions of one another (and should be measured from a 360 degree view point). For example: the value placed on quality is fundamentally based on its systematic delivery; consistent process evaluation & improvement measures must be implemented, in order to decrease and manage restraints for advancement. These imperatives directly correlate to the desired need for consumerism and the integration of a decentralized approach (or multiple contingency approaches) to problem solving - may assist with building: consumer confidence, health care quality and reform (that can surpass the existing criterion for lowering/managing rising health care (cost variations).

    The fact of the matter is, health care is a business, and the bottom line regarding profit/revenue stream can be viewed as a current (how to proposal). For that reason, it should be a non-contested fact, that, in order to maintain the integrity of the health care system, for all involved: you must continuously integrate new approaches and standards of operation (that are not only transparent for the provider, but also for the end user). This will require a paradigm shift in thought and strategic process. Note: The Health care industry is making great strides in its exploration of - quality practice imperatives, for sustainability and continuous improvement. With the inclusion of Lean/Six Sigma and other business models, the industry is beginning to take the action steps required for health care innovation/advancement (building from the inside - out).

     
     
     
    • Dr.Prakash Deshpande
    • Director, Coherent Communications

    I have a basic issue about the name "Health Care". If we observe carefully, all that health care facilities offer is "Disease Care". Why does and when does goes to existing health care facilities? only when the health has become an issue and one is no more healthy. So the mechanisms offered by "Health Care professionals are that of dis-ease care. Health care should be addressing the issues of Life style management, Proper exercise, Good nutrition and behavioral practices which will be conducive to health of an individual, the people s/he comes in contact and overall society. Maintenance of Good health should be a job of health care profession, while at present the profession looks at patients who suffer from one or the other ailment either physical, physiological, or psychological. There is reference to real health care in Ayurveda, in the form of Swastha Vrutta. The technological advances could be and shou ld be used for betterment of physical and mental health of human beings with a drive for well being and not for exploring possibilities, and for this some benchmarks could be evolved so as to appropriate and people-friendly ( in terms of economics) procedures could be evolved. The leadership may focus on these issues rather than political benefits, while making policies for natural food, natural substances, supplements naturally available vis a vis processed food, drugs, GMO and all those new developments which have not been proven good for animal and human life.

     
     
     
    • Ashok Malik
    • Consultant, M & A Consultants

    Business leaders, Investors and Politicians always look for "Next Big Thing" and Health Care in its all the avatars maybe the Next Big Thing. So, all the right noises at the opportune moment by all the above named Parties are more or less aimed at that. But, one thing is for sure each Party wants a Healthier World at a minimal cost. At the end of the day Politicians, Investors and Business Leaders see this as their moral duty along with collateral benefits. Consumer, Patient, Citizen..are all the different name of the same vehicle on which Health Industry shall ride and Grow. At the same time it should not be such an obsession that we have another Detroit! Thus, health care should start from pre natal days and be part of school curriculum so as to have an healthier population which needs minimal health care and less burden on the state. Citizen should be so socialised that they themselves take care of their physical health as they take care of their financial health. I think education and decentralisation is the key.

     
     
     
    • Garima Trivedi
    • Consultant, Access Healthcare International

    Great Article. With the dynamically ever changing world, climate, geographies and philosophies, change is the only constant element of progress. Yes I totally do agree with your thoughts small little changes with consistency brings a effective calculated change in a huge way. Thanks for sharing. Looking forward for more articles on this topic.

     
     
     
    • Ashok Malik
    • Consultant, M & A Consultants

    Business leaders, Investors and Politicians always look for "Next Big Thing" and Health Care in its all the avatars maybe the Next Big Thing. So, all the right noises at the opportune moment by all the above named Parties are more or less aimed at that. But, one thing is for sure each Party wants a Healthier World at a minimal cost. At the end of the day Politicians, Investors and Business Leaders see this as their moral duty along with collateral benefits. Consumer, Patient, Citizen..are all the different name of the same vehicle on which Health Industry shall ride and Grow. At the same time it should not be such an obsession that we have another Detroit! Thus, health care should start from pre natal days and be part of school curriculum so as to have an healthier population which needs minimal health care and less burden on the state. Citizen should be so socialised that they themselves take care of their physical health as they take care of their financial health. I think education and decentralisation is the key.

     
     
     
    • Howard Green, MD, FACP, FAAD, FACMS
    • Managing Partner Large Practice, Dermatology Associates, PA of the Palm Beaches

    Health Care in America remains the only industry in the world, private or publicly subsidized which fails to compete capitalistically based on the quality or price of the product it produces.

    Health care in America has become synonymous with 'insurance'. When you buy a house or a car, you don't buy insurance or a loan, you buy based on the quality and price of the house or car. The only products produced or manufactured by health care are clinical outcomes; 1) preventative, 2) medical, 3) surgical and 4) palliative outcomes.

    Tabulation and revelation of clinical outcomes will only be possible with a single payer insurance system with integrated EMR/EHR and billing systems. Revelation of outcomes will tell us who are the best doctors, hospitals, therapists, diagnostics and treatments, and more importantly why they are the best.

    Outcome revelation coupled with med mal reform will allow us to improve under-performing doctors (like the old morbidity and mortality conferences prior to the scourge of trial attorneys) and institutions instead of just suing their scrubs off. In addition, an integrated single EMR and billing system would allow for the real time revelation of fraud and bio-terrorism and disease pandemics.

    Three big industries will do all in their power to prevent integration and revelation of outcomes; 1) The insurance industry which rations care for profit. What would happen if Humana patients have higher degrees of morbidity and mortality compared to Untied patients in disease, sex and age matched cohorts? 2) The pharmaceutical industry which spends 40 % of its income on marketing telling you not to trust your doctor, but to ask your doctor if this drug is right for you. What would happen to pharma if a generic drug or no drug is found to result in comparable outcomes to their blockbuster product? 3) Since revelation of outcomes would only be possible with med mal reform, the trial lawyers would prevent this from ever happening. The new draconian HIPPA regulations which fiscally slaughter physicians if their data gets stolen or robbed even if there's no deleterious consequences to the patients. HIPPA will prevent the integration and tabulation of outcomes according to variables and is another nail in the coffin of capitalistic health care based on quality and price.

    Conclusion: Single payer will never happen in this nation even with 40 million uninsured and 100 million under insured due to pharma, insurance and legal industry client politicians. We will continue the status quo of a low outcome, high overhead publicly subsidized private health insurance bureaucracy operating parallel to and within Medicare and Medicaid insurance. What a shame, what a scam. It's a drain on entrepreneurship and businesses in America to have employee based health insurance. In addition, a waiter in Canada can get pneumonia without worrying about bankruptcy, in the USA, the waiter with pneumonia goes bankrupt

     
     
     
    • Michelle Batt
    • Advisor, Consultant & Patient Advocate, Lead by Experience

    Couldn't agree more with these 5 imperatives and love the full report from the forum! We need to involve team members from across disciplines and all stakeholder groups in the innovation and improvement process. While I know this info is from last summer, I/we would love to participate and offer my Experience Design and Innovation expertise in this innovation process with HBS/HMS teams.