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9
Incentives Aligned with
Value and Learning
INTRODUCTION
The present structure of the American healthcare system rewards vol-
ume over value and performing procedures over achieving the best out-
comes. Transforming the health system will require a radical change in key
precepts—including incentive schemes—and has the potential to elevate
national healthcare statistics from mediocre to excellent. If this is to occur,
commitments must be made by all stakeholders, and incentives will need
to encompass both monetary and professional rewards. Incentive programs
already are scattered across the country, but the system as a whole should
be reengineered so that all stakeholders—for example, physicians, patients,
health systems, payers, advocacy groups, and insurers—provide incentives
for constant improvement, science-driven care, and value.
Papers in this chapter illustrate approaches to realign incentives to re-
ward value and learning over volume and excess. In the first paper, Michael
E. Chernew of Harvard University argues that cost containment and payment
for value, not volume, should rank high in strategies to effect transformative
change. He shows how global payment models offer promise for building a
system based on science and value. Integral to realigning the health system
are comprehensive performance measures that are based on solid evidence
and observability as well as incentives that reward positive health outcomes.
The second paper, presented by Richard Gilfillan, formerly of Geisinger
Health System, makes a business case for practicing evidence-based, inte-
grated care rather than the high-volume, fragmented care typical in much of
the United States. He notes that the business model for providers and hos-
213
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214 PATIENTS CHARTING THE COURSE
pitals should be the main focus as it can trump à la carte incentives in de-
termining whether individuals or organizations focus on volume vs. value.
Additionally, Gilfillan highlights how systems approaches can produce
reliable processes that minimize errors and how systems can be designed to
put evidence-based knowledge in the real-time care workflow.
Anne F. Weiss and Bianca M. Freda of The Robert Wood Johnson
Foundation describe the Aligning Forces for Quality (AF4Q) initiative.
Active in 17 regions around the country, leadership teams of multiple stake-
holders are involved in crafting performance measures, building quality
improvement infrastructure, and assessing ways to better engage the public
in the concept of a learning health system. The authors state that through
the AF4Q initiative, the Foundation hopes to learn how to improve messag-
ing, encourage community participation, and stimulate a learning culture.
PAYING FOR VALUE AND SCIENCE-DRIVEN CARE
Michael E. Chernew, M.D.
Harvard University
All stakeholders agree that the healthcare system should promote value:
the amount of benefits received per dollar spent. Clinical improvements are
likely the most significant benefit, but nonclinical benefits, such as reassur-
ance, are important as well. Admittedly, benefit is in the eye of the beholder,
but it is useful in this context to define benefits from a patient-centric per-
spective. Value calculations should use a broad definition of costs, including
medical and nonmedical costs associated with care. Many tools can be used
to promote value, including the design of provider payment and benefits,
the focus of this paper.
The general theory of how value is created in competitive markets
is straightforward. Consumers know their preferences. They face prices.
They make choices. In a perfectly competitive setting, economists define
the outcomes of those choices as reflecting value. This model is subject to
extensions and caveats as markets deviate from perfect competition, but for
the most part, it captures how market economies work.
In imperfect markets, consumers may not be making the right choices
(in their diet, for example), but solutions often require more paternalism
than economists typically prefer. When problems arise within such markets,
private or public information is often provided to improve choice, or
markets are regulated to prevent the most serious problems. But in most
markets, interventions are modest, and market forces are the benchmark
strategy used to generate value. The problem in health care is that for a
number of reasons related to imperfect markets and the salience of health,
the problems are more severe.
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INCENTIVES ALIGNED WITH VALUE AND LEARNING
A key problem is that consumers do not observe quality in health care.
Quality measurement and communication in health care may be improved,
but for the foreseeable future, the information available will be woefully
inadequate to support a perfect market. Moreover, in part because of
poor information, providers have weak incentives to improve quality. For
example, if a provider works in a hospital and is paid per admission, he/
she has little incentive to improve quality and prevent readmissions. On
the patient side, apart from the information problem, insurance distorts the
choices because incentives to avoid high-cost treatments and providers are
typically very weak.
The issue of obtaining value on the provider’s side generally focuses
on changing provider incentives and combining those incentives with in-
formation. Payment reform, including value-based purchasing, is largely
a provider-centric way of promoting value. This is in contrast with value-
based benefit design, which is patient-centered. The two are not mutually
exclusive, and they should be synergistic. For example, it would be prob-
lematic if all services were free for patients but providers were discouraged
from providing those services. Recognizing where to use patient versus
provider incentives and how to integrate them is important.
Despite the focus on value, the overarching concern of the healthcare
system must be spending growth. In the President’s budget, the ratio of debt
to gross domestic product (GDP) becomes 90 percent by 2020 (Figure 9-1)
(CBO, 2010). That ratio is not good, and it also is on an upward trajectory,
100
90
Debt/GDP (%)
80
70
60
50
40
09
10
11
12
13
14
15
16
17
18
19
20
20
20
20
20
20
20
20
20
20
20
20
20
FIGURE 9-1 Expected trajectory of ratio of U.S. debt to gross domestic product
(GDP). Payment must do more than promote value; it must also control costs.
NOTE: Cited from CBO Analysis of the President’s 2011 Budget.
SOURCE: CBO, 2010.
Figure 9-1
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216 PATIENTS CHARTING THE COURSE
which is even more concerning. Much of the forecast is based on projected
healthcare spending. This fiscal imbalance must be resolved, the mecha-
nisms used will define the healthcare system of the future, ideally promoting
value while constraining spending.
Alternate Payment Systems
Incentives and payment for promoting value must be designed to
control aggregate spending. This is important when considering pay-
ment systems because they must be evaluated not simply on the basis of
whether they promote value (which is important), but also on the basis
of whether they contribute to a fiscally sustainable healthcare system.
One prominent payment strategy for promoting value is pay for perfor-
mance (P4P). It is almost cliché to observe that one will get what one pays
for. Currently, because value is not being paid for, value is not being de-
livered. The idea behind P4P is that high-value services can be defined and
paid for. P4P raises several concerns. One example is the comprehensiveness
of measures. Everything cannot be measured. Current measure sets can be
expanded, but they will remain incomplete. The result is a multitasking
problem. If one thing is paid for, providers may stop doing other things,
even if some of those things are high-value. Another concern is the size of
the reward. How big a reward is needed to change behavior meaningfully?
There are also issues of design. Should providers be paid for relative or
absolute performance? Existing evidence for the success of P4P programs is
limited, much more limited than the proponents of P4P would have thought
5 to 10 years ago. Richard Frank and Kathleen Mullen conclude an evalu-
ation of a P4P program in California by noting, “Our results cast doubt
on the promise of pay for performance as a transformative mechanism for
improving the general quality of the healthcare system” (Mullen et al.,
2010). Overall, P4P should be considered a tool to be used in the context
of broader payment reform. The fundamental concern in health care is the
spending trajectory, and it is unlikely that P4P programs alone will be able
to change that trajectory sufficiently. Moreover, the technical concerns are
sufficiently great that P4P is unlikely to be the foundation of an incentive
program designed to promote value.
Another payment approach involves bundling payments. One bundling
strategy is episode-based payment. The idea behind episode-based payment
is that payment should be made for episodes of care, bundled across as
many services and providers as possible. This approach contrasts with fee-
for-service, which encourages fragmented care. Hospitals and their physi-
cians should be included in the bundle, and in many cases, other services,
such as post–acute care, should be bundled in as well. Payment should be
defined based on what consumers care about (care for a particular ailment
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INCENTIVES ALIGNED WITH VALUE AND LEARNING
or collection of ailments), as opposed to the detailed services that are part
of that care.
Episode payment requires good performance standards to ensure that
people are actually receiving good-quality care. Obviously, the least costly
way to provide care is not to provide it. As with P4P, technical issues arise
about how to implement episode payment. Episodes must be defined, and
it must be recognized that people have multiple episodes. Establishing pay-
ment rates is problematic if a patient has multiple episodes concurrently.
Another concern is who controls the payment (who is the residual claim-
ant). Finally, it remains to be seen how much of health care is amendable
to episode definition and how payments would be updated over time.
Episode-based payment has been implemented, at least on a limited scale,
demonstrating its feasibility. For the reasons cited above (comprehensive-
ness, dealing with multiple episodes), however, it is probably best to view
episode-based payment as a tool, as opposed to the fundamental way of
solving cost and quality problems.
Another bundled payment approach is global payment, which entails
a single risk-adjusted payment to providers (or a provider group). This
approach should be defined to include performance standards, which ad-
dress the incentive to provide less care and distinguishes this strategy from
past capitation approaches. Global payment also must deal with the risk
faced by providers. Doing so may require a transformation of practice
organization, which, while challenging, is feasible. Many accountable
care organization models, which use gain sharing, are a form of this ap-
proach. Implementation issues, such as how the money flows and who
is the residual claimant, would have to be considered carefully. As with
episode-based payment, the process for updating fees over time is impor-
tant. Nevertheless, because of its global nature, this approach is a much
more likely starting point for solving the fundamental cost problem than
some of the other payment strategies.
One example is the Alternative Quality Contract that is offered by
Blue Cross Blue Shield of Massachusetts. A global payment is made to a
physician organization that assumes accountability for the full continuum
of care—from preventive to end-of-life care and everything between. The
global budget is updated over 5 years, in general by the consumer price
index, so providers agree to a global payment trajectory for 5 years. This
is not a 1-year capitation. Providers can receive performance bonuses, and
there is a comprehensive set of ambulatory and inpatient performance
measures. Payment flows to providers just as in a fee-for-service system, but
it is oriented to the primary care physician group (which could be a multi-
specialty group), which is the residual claimant (and bearer of the risk).
This makes the approach consistent with medical home models.
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218 PATIENTS CHARTING THE COURSE
Performance Measures in a Learning Health System
All of the new payment models require performance measurement
which will need to be able to identify bad performers; be supported and in-
formed by a strong clinical research base; and adjust for risk. Meeting many
of these requirements is facilitated by larger care systems and better infor-
mation systems, suggesting that care systems are likely to become larger.
The question at hand is how to deal with this issue in a learning environ-
ment, especially in a healthcare system that is constantly evolving with new
evidence being generated. New approaches are good, but quality measures
are unlikely to incorporate cutting-edge care directly. Evidence takes time
to develop and to be accepted. Some outcome measures, however, such as
patient satisfaction, complications, and readmission rates, hold potential for
capturing innovation. A set of outcome measures may be broad enough to
capture providers who significantly underutilize high-value, cutting-edge care.
Updating measures for innovative care will be a particular challenge.
New measures will have to be incorporated as new data emerge. The mea-
sure set will always lag. A core set of measures that are transparent and
developed through some public or quasi-public process will be necessary.
Additionally, some expansion and experimentation by purchasers will have
to be allowed as they devise new measures. This will be an ongoing process
among purchasers and other quality-focused entities.
Updating bundled payment for new services will be a particular chal-
lenge that will require considerable clinical knowledge. Payers will have to
develop a system for increasing payments if particularly valuable services
are developed, but the system will need to maintain overall fiscal restraint.
In the context of any fiscally sensible system, maintaining quality will
require ongoing effort. However, if the concern is not to diminish quality in
any way and thus to pay for whatever people (or their doctors) want, the
system will collapse by its own weight, and quality will suffer.
Conclusion
In summary, the economy is the goose that lays the golden egg (the
healthcare system). If spending increases enough that it destroys the econ-
omy, the healthcare system will be degraded. A quick recipe for going
forward is to (1) start with cost containment, probably moving to global
payment; (2) build as comprehensive a performance system as possible;
(3) incentivize patients appropriately; (4) provide as much information as
possible to everyone in a manageable way; and (5) encourage organiza-
tional reform. Taking these steps will entail a great deal of work, but we
may have no choice but to start the journey.
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INCENTIVES ALIGNED WITH VALUE AND LEARNING
GENERATING EVIDENCE TO GUIDE CARE
Richard Gilfillan, M.D.
Geisinger Health System (former)
Center for Medicare and Medicaid Innovation
America’s healthcare industry is highly innovative in sectors that re-
ward innovation. The development of electronic health records (EHRs)
and other data management innovations will speed learning and innova-
tion, but these innovations could produce either more or less value for
patients depending on the industry’s business model. The current business
model focuses learning and innovation on increasing the volume of and
revenue for services provided. To focus learning on innovation and pro-
duce more value for patients, new business models are needed that reward
patient-centered value. There are ample opportunities to improve the value
produced by the healthcare system, and there is much to be learned. The
recent healthcare reform legislation includes a number of alternative reim-
bursement approaches for Medicare and Medicaid. Private payers could
work closely with the Centers for Medicare & Medicaid Services (CMS) to
develop robust partnerships with providers committed to learning to deliver
higher-value care. Such organizations, with a preponderance of their busi-
ness dependent on delivering high-value outcomes, will demonstrate how
much more value the healthcare system can deliver.
Patient-Centered Value as the Vision
The good news is that the United States already spends $2.6 trillion
annually on health care. That amount should be more than enough to cover
everyone. Yet the nation has 40 million people uninsured, experiences fre-
quent medical expense–driven personal bankruptcies, and is characterized
by highly variable clinical outcomes. From a patient perspective, we have
a low-value system. The problem is that too much of the value produced
by the system flows to producers, including insurers, hospitals, physicians,
and other providers of care.
The Institute of Medicine’s (IOM’s) learning health system, the Insti-
tute for Healthcare Improvement’s (IHI) triple aim framework (population
health, experience of care, per capita costs), and The Commonwealth
Fund’s high-performance delivery system constitute alternative visions of
a system that would optimize the quality, affordability, and experience of
care for patients (Berwick et al., 2008; Commonwealth Fund, 2010; IOM,
2007). All are based on a patient-centered, value-driven healthcare system.
The Affordable Care Act (ACA) of 2010 assumes that higher-value care
would help finance coverage for millions of uninsured Americans. These
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220 PATIENTS CHARTING THE COURSE
visions all rely on increased innovation and knowledge to create higher-
value care.
But are innovation and knowledge necessarily drivers of value? Should
we press for more innovation and systems of learning without addressing
the business context in which they occur?
The Healthcare Industry Business Model
Businesses produce what is rewarded. Industries evolve from busi-
ness models that align incentives with desired outcomes. The healthcare
industry’s fee-for-service business model is perfectly aligned with the re-
warded outcomes: more revenue from more services. The dictum “no
margin, no mission” recognizes that not-for-profit healthcare organizations
operate within the same context and generally produce the same high-cost
outcomes.
In policy discussions, the U.S. healthcare system is expected to produce
efficient, high-quality care and is referred to as broken because it does not.
Yet no rewards are provided for high-value care, and no one is held ac-
countable for producing it. By rewarding piecework, the current business
model encourages fragmentation of care. If no one is in charge, no one
can be accountable for the outcomes that occur. The automobile industry
is more accountable for health outcomes than is the healthcare indus-
try. When accelerator problems in its cars were found to cause 3.5 deaths
per year, Toyota was forced to recall and fix 8.5 million cars. When the
IOM identified 90,000 unnecessary deaths per year caused by medical
errors, there was no one to call (IOM, 1999). Ten years later, despite a great
deal of work and attention, medical errors continue to cause thousands of
deaths annually (Sebelius, 2010).
If high-value outcomes are desired, business models that reward pro-
viders for delivering those outcomes are needed. The right business models
to produce high-value care are unknown, although proposals abound.
Congress has included a variety of new payment initiatives in the healthcare
reform legislation so that different models can be evaluated. One thing is
certain: if we are going to achieve the visions of the IOM, IHI, and The
Commonwealth Fund, the primary challenge for policy makers and health-
care managers over the next decade will be driving and managing the tran-
sition of the healthcare business model from producer-centered volume to
patient-centered value. Key attributes of these models are listed in Box 9-1.
The Role of Innovation and Learning
Policy makers have identified a lack of innovation and knowledge of
what treatments work as reasons for the current low-value system. But
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BOX 9-1
A Choice of Healthcare Business Models
Producer-Centered Volume Patient-Centered Value
vs.
• Uncoordinated • Coordinated
• Fragmented • Integrated
• High-cost • Lower-cost
• Fair quality • High quality
• Minimal accountability • Triple aim accountability
innovation and learning do not occur in a vacuum. Dynamic industries
learn because innovative business practices are rewarded. Moore’s law for
the semiconductor industry states that the number of transistors that can
efficiently be placed on an integrated circuit board doubles every 2 years.
This law has held true for 45 years because faster, smaller processing chips
produce large margins for Intel and other focused producers. Learning and
innovation follow the business model.
Producer-Centered Volume Innovation and Learning
The current healthcare business model directs innovation in three ways.
Businesses proactively select innovation and learning opportunities based on
the expected business development opportunity. An example is the focus
on new drugs to treat chronic diseases that are prevalent in developed
countries. Businesses typically do not invest in learning that offers no return.
Businesses also avoid innovations that might compromise their success. Hos-
pitals traditionally have not invested in programs to decrease readmissions.
Rapid innovation occurs in health care. I recently heard a presenta-
tion by a medical device sales representative who proudly displayed four
iterative versions of her company’s spinal fusion screws. The cycle time
was 9 months. The speaker had no information demonstrating improved
outcomes for patients.
Case mix adjustment for Medicare Advantage (MA) plans provides
another example. CMS began the rollout of Hierarchical Condition Catego-
ries (HCC) coding for case mix adjustment in 2004. Over the next 3 years,
an entire new industry segment of HCC coding optimization erupted. The
innovation was driven by a fundamental change in the business model for
MA plans. When revenue became a direct function of population risk,
investments in systems to fully identify the burden of patient risk became
a necessity.
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222 PATIENTS CHARTING THE COURSE
Innovation in the pharmaceutical industry continues to produce impor-
tant advances in specialty drugs. Unfortunately, the pace of value-adding
discoveries in the more traditional pharmaceutical sector has slowed. Much
of the learning and innovation has produced “me too” drugs that provide
high margins for producers but little incremental value for patients.
Why does the healthcare system invest in non-value-added medical
devices, coding systems, and purple pills, but not programs for care transi-
tions? The obvious answer is that the former are driven by strong business
cases, while the latter are not. In the current business model, innovation is
much more likely to decrease than to increase patient-centered value. The
United States does not have low-value health care because it lacks knowledge
about delivering high-value care, but because the healthcare business model
rewards and thereby drives low-value care. Innovation and learning need
to be focused on patient-centered value business models that reward them.
Patient-Centered Value Innovations
Geisinger Health System (GHS) includes a Clinical Enterprise with 800
physicians and three hospitals and a 240,000-member Geisinger Health
Plan (GHP). The system has EHRs that connect all sites of care and GHP.
Neither entity works exclusively with its GHS partner. Both rely on non-
Geisinger relationships for the majority of their business. GHS physicians
do provide primary care for 40 percent of GHP members. This shared
population provides an opportunity for joint pursuit of innovative care
delivery and financing initiatives.
Five years ago, the GHS board of directors and leadership made
“Geisinger Quality” the central strategic goal. There were four reasons for
this approach:
• It is the right thing for our patients and our community.
• It inspires our staff.
• Our integrated system is well positioned to create knowledge about
higher-value care.
• The current model is not sustainable.
Quality was broadly defined to include the IOM’s six aims for quality
improvement (IOM, 2001) and several other dimensions. Generally, the
goal was to deliver high-value patient-centered care.
To execute this strategy, we developed a series of care transformation
initiatives as joint projects of our Clinical Enterprise and GHP teams.
These initiatives target care models of high frequency and costs that also
demonstrate high variance in care and outcomes—models that could be
significantly improved to deliver higher-value outcomes for patients.
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Once care models have been identified for improvement, evidence-
based best practices are researched, agreed upon, and implemented. The
EHR is used to enable this reengineered care and to collect data with which
to document results. A new GHP contractual arrangement also is put in
place to align reimbursement with the expected higher-value outcomes.
The payment approaches are aligned with the nature of the clinical process
of care. Global, bundled payments are used for patient-based episodic
care, while pay for performance and shared savings incentives are used
for population-based improvements. Each care model innovation, then, is
accompanied by a new business model that rewards high-value outcomes.
Each initiative typically tracks process, outcome, efficiency, and patient
satisfaction metrics. Process metrics demonstrate compliance with evidence-
based care. Outcome metrics show the impact of the new care pathways on
patients’ health status. Efficiency metrics track improvements in the total
payer cost or in the cost of delivering a service. Patient satisfaction metrics
monitor the patient experience of care.
Improvement in these measures of success leads to better financial re-
sults for the Clinical Enterprise. Physicians and operational managers are
directly impacted as well because their performance evaluations and incen-
tive payments are based on the same outcomes. The effect of these changes
in clinical and reimbursement models, then, is to bring the value dimen-
sions of patient experience, health status, and efficiency into the managerial
mainstream. Clinical managers and physicians are directly accountable for,
and therefore attentive to, outcomes. Outcome measures for the population
are the measures of operational success tracked directly by managers. Value
garners managerial attention.
The standard reimbursement arrangement between the parties is a
straightforward fee-for-service contract. For the clinical enterprise, these
programs move the business model from volume toward value. For GHP,
the better outcomes, more satisfied patients, and lower costs provide an
opportunity for growth in market share. Accordingly, GHP provides addi-
tional payments to help the physicians and practices finance the care trans-
formation. The revised business models establish a “virtuous cycle” that
drives a provider–payer partnership to deliver better patient outcomes and
higher-value health care.
Examples of this approach include the following:
ProvenCare Acute:
• Population—those undergoing acute surgical and medical procedures
• Care model innovation—evidence-based redesigned care pathways
for acute hospital services
• Business model innovation—bundled payment for an episode of care
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224 PATIENTS CHARTING THE COURSE
• Measures of success—outcome metrics, compliance with guide-
lines, patient satisfaction, cost of services
• Result—improved outcomes and cost of services (Table 9-1)
Chronic Disease Care Optimization:
• Population—primary care office patients with chronic diseases
• Care model innovation—evidence-based care pathways and EHR-
based registries and reminders for patients with diabetes, high
blood pressure, and hyperlipidemia
• Business model innovation—pay-for-performance incentives
• Measures of success—bundled metrics for diabetes, hypertension,
cholesterol and preventive services, patient satisfaction
• Results—marked improvement in all metrics (Table 9-2)
ProvenHealth Navigator:
• Population—all Medicare beneficiaries seen in primary care offices
• Care innovation—value-driven medical home model based on part-
nership between primary care providers and GHP
• Business model innovation—fee for service supplemented with sti-
pends and a quality-driven shared savings model
• Measures of success—triple aim outcome metrics for health status,
patient experience of care, cost of care
• Results—improvements in Healthcare Effectiveness Data and Infor-
mation Set, patient satisfaction, and cost metrics (Table 9-3)
Patient-Centered Value Learning
This patient-centered value business model focuses learning on systems
to improve outcomes. This is best seen in our ProvenHealth Navigator medi-
cal home model. The measures of success for this model are improvements
in the dimensions of health status, patient experience of care, and total cost
of care. Physicians are rewarded explicitly for improvements along these
dimensions. As a result, the practices and GHP are tightly focused on moni-
toring outcomes together. The entire practice team, including GHP in-office
case managers, reviews outcome results at monthly meetings. The practice
managers produce monthly reports demonstrating the results of chronic
disease care and patient satisfaction for each physician. GHP staff report on
patients admitted to the hospital, all readmissions, and the total cost of care.
Admissions, readmissions, and concerns for specific patients or care systems
are discussed with the entire staff. The whole team, including office staff
and GHP payer staff, is engaged in conversations about what could be done
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TABLE 9-1 Value Learning: ProvenCare
Results Improvement (%)
Patients with more than one complication 28
Atrial fibrillation 17
Any pulmonary complication 43
Deep sternal wound infection 25
Readmission within 30 days 44
Innovation: Evidence-based best practice surgical case redesign
Evidence Development: Process and outcome metrics for surgical care
Incentive: 90 global payment, including complications
TABLE 9-2 Value Learning: Chronic Disease Care Optimization
Results Improvement (%)
Diabetes bundle 30
Coronary disease bundle 20
Preventive care bundle 75
Innovation: EHR-driven registries and reminders
Evidence Development: Physician-specific monthly Healthcare Effectiveness Data and
Information Set (HEDIS) metrics
Incentive: Straight pay for performance
TABLE 9-3 Value Learning: ProvenHealth Navigator
Results Improvement
Admissions Decreased 16%
Readmissions Decreased 30%
Quality metrics Improved as noted in Table 9-2
Innovation: Medical home with population management built into the primary care office
Evidence Development: Process and outcome metrics for surgical care
Incentive: Fee for service, pay for performance, stipends and shared savings paid based on
quality outcomes
better. Examples of best practices from other offices are diffused rapidly.
In this environment, the team members can see the impact they are having
across an entire population. Every member knows that good outcomes will
be celebrated and poor outcomes scrutinized to learn important lessons.
In the ProvenHealth Navigator model, outcome measurement flows
directly and naturally from the delivery of care. Understanding the patient
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226 PATIENTS CHARTING THE COURSE
experience, quality outcomes, and the cost of care is a central manage-
ment function of the practice. Learning to improve these outcomes is built
directly into the operations of the practice.
Lessons Learned
We have made mistakes and learned important lessons over the past
5 years. The most significant lessons learned are as follows:
• It is possible to improve delivery systems to optimize the quality,
patient experience, and efficiency of care simultaneously.
• Change is difficult to accomplish in the context of daily practice; it
requires ongoing attention, additional dedicated staff, and a good
motivation.
• Financial support and rewards are essential to make the business
case, but:
— individuals respond to multiple drivers, not just payment; and
— transparency, constant feedback, and celebration of success
drive staff engagement.
• Clinical and business leadership are critical.
• The provider–payer partnership is central.
• Transparency works: sharing results within and across practices
drives improvement.
• Engagement and accountability work best in small units—groups
of four to five physicians.
• Clinical transformation is hard work—focusing on initiatives with
broad impact delivers the most added value.
• Timely analysis of results is essential to rapid-cycle innovation.
• Innovations affecting small numbers of patients provide limited
data for analysis and learning.
The innovations described in this paper impact a relatively small por-
tion of the overall clinical activity of our system. Other parts of the system
operate with a more traditional volume-based model, albeit within the
culture of a not-for-profit multispecialty group practice. The results dem-
onstrate what is possible within an organization operating two business
models. How much more value could be produced in an environment where
every operational area was working to optimize patient-centered value?
Given the synergistic effects among initiatives that we have seen, we believe
it would be possible to produce much more value in a simplified business
environment.
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INCENTIVES ALIGNED WITH VALUE AND LEARNING
Implications for Health Systems
Our experience leads to the following suggestions for organizations,
providers, and payers that make a strategic commitment to delivering
higher-value care to their communities:
• Make patient-centered value an explicit strategic commitment, and
communicate it clearly to the organization.
• Make patient-centered value innovation objectives important rivers
d
of senior leaders’ incentive plans.
• Include the innovation goal in all employee incentive plans.
• Build population registries and other tools with which to manage
a population, not just those in the hospital.
• Form payer partnerships to align reimbursement and agree on joint
initiatives and R&D investments.
• Explicitly identify the source of added value before selecting a
particular initiative.
• Maximize the leverage of care redesign and reimbursement changes
to drive the broadest clinical impact with the least administrative
work.
• Shorten the learning cycle time:
— build evidence-based guidelines into the flow of care;
— build data capture into standard care processes; and
— measure and feed back results frequently.
• Extend initiatives to as many patients as possible to create mass
and momentum for change, as well as meaningful data.
• Establish analytical resources close to the innovation activities to
provide rapid evaluation and feedback.
• Celebrate success.
Public Policy Implications
The most significant public policy opportunity to improve value inno-
vation and learning is to create the will for healthcare organizations to
deliver high-value outcomes. The reimbursement innovations for providers
and MA plans in the recent healthcare reform legislation will drive move-
ment in that direction. The greatest impact would result if public and
private payers developed a common approach that gave providers an un-
ambiguous context in which to deliver higher-value care. Other suggestions
include the following:
• Begin a public campaign to legitimize patient-centered value as an
explicit aim.
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228 PATIENTS CHARTING THE COURSE
• View CMS and the Center for Innovation as payer partners work-
ing with providers to deliver patient-centered value.
• Make outcome data rapidly available to providers operating under
value-based contracts.
• Increase transparency and stimulate learning by providing claims
data to third parties for provider profiling.
• Challenge payers and providers to step up to accountability.
• Develop partnerships with private payers to provide greater patient
mass for care transformation efforts by providers.
• Build a rapid learning network; use the EHR capabilities of mul-
tiple integrated systems to establish a learning web that can mine
current and future data to evaluate treatment impacts.
• Be cautious about evaluating initiatives that occur in provider sys-
tems with mixed business models.
Conclusion
Opportunities to improve the value of health care abound, even with
the limited knowledge we have today. As the healthcare system becomes
digitized, shorter learning and innovation cycles become desirable and inevi-
table. We will learn from other industries that use refined data management
capabilities to adjust their operations in real time. Whether innovation will
drive higher value for patients or more revenue and volume for producers
is unclear. The most significant step we can take to ensure that innovation
serves patients is to reward higher-value outcomes. Public–private payer
initiatives with specific providers committed to an unambiguous patient-
centered value business model would provide the most robust learning envi-
ronment. This is the model that can teach us what is possible when every
employee wakes up every day committed to learning how to better deliver
high-value care for patients and the community.
CREATING A LEARNING CULTURE
Anne F. Weiss, M.P.P., and Bianca M. Freda, M.P.H.
The Robert Wood Johnson Foundation
The American healthcare system faces critical challenges, including
poor quality, skyrocketing costs, and troubling racial and ethnic dispari-
ties. The ACA of 2010 arguably should provide tools to address many of
these challenges. But it is unrealistic to expect that the nation’s healthcare
system need only undergo a one-time transformation. Rather, the health-
care system will need the ability to identify problems proactively, develop
solutions for those problems quickly, and create a culture that rewards
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INCENTIVES ALIGNED WITH VALUE AND LEARNING
solutions and promotes the ongoing search for problems and their respec-
tive solutions. Essentially, real reform requires that health care become an
ongoing learning enterprise. Unfortunately, health care currently is not that
sort of system. In fact, American health care offers few incentives for, and
indeed poses formidable barriers to, learning and problem solving. There is,
however, hope. Work supported by The Robert Wood Johnson Foundation
(RWJF) is helping the field understand some of the important necessary next
steps toward such a learning system. Many observers have noted that the
current system of paying for health care in the United States creates dis-
incentives for high-quality care: it encourages wasteful and fragmented care
and does not reward providers who struggle to deliver good care (Miller,
2009). RWJF’s work to improve healthcare quality suggests that there are,
however, powerful nonfinancial incentives that can be used to influence
behavior and shape a learning culture.
RWJF launched its Quality/Equality strategy and its signature initiative,
Aligning Forces for Quality (AF4Q), in 2008. RWJF’s board of directors
has made a $300 million commitment to the strategy through 2015. The
strategy was designed around two principles: first, that while quality is a
national problem, health care is delivered locally, and fixing it requires local
action; second, that those who receive, give, and pay for care—consumers,
providers, and purchasers—need to team up and align their efforts to create
lasting change (Painter and Lavizzo-Mourey, 2008).
AF4Q is being implemented in 17 targeted regions. Three are states
(Minnesota, Wisconsin, and Maine); one is a rural county in California; and
most of the rest are multicounty or metropolitan areas. In each region, a
multistakeholder team of healthcare leaders, physicians, nurses, consumers,
health plans, business, and others carry out three key activities: they issue
public performance reports on hospitals and physicians, develop a sustain-
able capacity or infrastructure to help physicians improve, and work to
engage consumers in using healthcare information.
For this strategy to succeed, different stakeholder groups need to reach
fundamental agreement on difficult tasks, such as defining and measuring
good care, engaging professionals in efforts to improve care, and getting
patients and consumers more involved in different aspects of their care. And
they have to accomplish these tasks in the absence of any meaningful policy,
social, or economic incentives. Although there is certainly overwhelming
evidence of various kinds of healthcare quality problems, different groups
generally understand those problems differently (AHRQ, 2009).
The challenge of getting different stakeholders aligned around common
goals in AF4Q is very much like the challenges to creating a learning health
system. RWJF and its partners have addressed these challenges by using
strategic communications, engaging health system leaders, and engaging
consumers.
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230 PATIENTS CHARTING THE COURSE
Using Strategic Communications
During 2007–2009, RWJF, in partnership with several strategic com-
munications firms, embarked on a series of message research projects with
the general public, physicians, consumers, and employers. In general, these
projects involved a review of existing research, individual interviews, focus
groups, and telephone or online surveys. The firms developed evidence-
based messages, which were extensively sourced to ensure that they would
be credible. Messages were distributed widely to AF4Q community teams
and other grantees, who were trained in using the messages and were given
interactive tools, such as a slide builder. The messages, training, and tools
have been extremely well received by the AF4Q communities. There are
lessons to be learned about each audience for these communications and
ways to reach them effectively, which should also prove useful in efforts to
create a learning culture.
Research on the general public was conducted in part by a firm, Olson
Zaltman Associates, with a unique methodology based on theories of cogni-
tive learning: that people learn and perceive the world according to a few
universal frames or metaphors, and these metaphors help them derive mean-
ing from a wide range of related concepts. Therefore, the firm’s approach is
to identify these universal emotional metaphors and use them as the founda-
tion for messaging and engagement efforts. In the case of health care, Olson
Zaltman Associates’ research reveals that people view health care as a jour-
ney from a state of confusion and complexity to one of relief and simplicity,
and they see quality health care as a patient–provider relationship that takes
them to their goal, around multiple barriers, and results in comfort and peace
of mind. The essence of quality health care from patients’ perspective is hav-
ing a close relationship with their medical provider that is based on trust.
Subsequent message research with a physician audience emphasized
AF4Q’s focus on measuring and publicly reporting on the quality of care.
This research revealed that physicians are understandably focused on how
performance data are collected, adjusted, and analyzed and how the data
will be used; they expressed the greatest confidence in initiatives led by
their peers. Physicians were interested in how they compared with their
colleagues but did not want this information made public. They did not
expect their patients to use public performance information. The results of
this research were used to develop messages that acknowledge problems
with previous efforts to measure and report quality and physicians’ frus-
tration with the healthcare system. These messages give physicians reasons
to participate in the project and ask them to contribute their leadership,
expertise, and influence to help improve care and make their patients better
partners in care. It is also important to link the process of measuring and
reporting on quality with payment reform.
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Messages were developed for employers as well, based on insights
provided by AF4Q communities. These insights revealed the need to com-
municate very basic reasons why employers should take an interest in poor
healthcare quality and offer specific ways they can contribute. Major mes-
sages used with the employer audience include both the direct and hidden,
indirect costs of poor health care; the added premium costs of wasteful,
poor-value care; and examples of companies that have made a difference.
Engaging Health System Leaders
Health system leaders, such as hospital board members, do not always
make quality a strategic priority (Jha and Epstein, 2010). Fewer than half
of hospital board members rate quality of care as a top priority, and only
a minority have been trained in quality. A number of quality improvement
initiatives sponsored by RWJF have explored ways to engage board mem-
bers and senior executives in efforts to measure and improve quality (RWJF,
2008). Based on those experiences, a number of recommendations can be
made for engaging health system leaders in a learning community:
• Make the case based on both mission and margin: build evidence
for how learning is “the right thing to do” but also is good for the
bottom line.
• Use a trusted intermediary, not a consultant, to reach hospital
leaders.
• Make learning activities a standing agenda item, with dashboard
metrics that align with other institutional goals.
• Ask health system leaders to play a role in publicly showcasing and
communicating about results, as well as in motivating staff.
Engaging Consumers
Consumer engagement is a critical strategic component of AF4Q, as
it should be in a learning healthcare system. RWJF’s goal is for consumers
to access and use health and performance information to make healthcare
decisions at key points. Consumer representation in all aspects of a learn-
ing organization, including governance and decision making, is critical to
achieving the goal of patient-centered care (Regenstein and Andres, 2010).
Consumer representatives may require ongoing training and support to play
a meaningful role.
Authentic consumer representation involves individuals who do not
have a financial stake in the healthcare system. They may represent a
specific constituency, be it faith-based, disease-based, or population-based
(NPWF, 2009). Individuals who are current or retired employees of a
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232 PATIENTS CHARTING THE COURSE
healthcare organization and their spouses are often tagged as “consumer”
representatives but may not be able to play that role convincingly.
Too often, healthcare improvement initiatives focus on what is techni-
cally and politically feasible rather than what is of greatest importance to
patients and families. This is due, in part, to the relative absence of infor-
mation on meaningful outcomes that capture patients’ experience over time
and in different settings, compared with an abundance of information on
specific clinical processes and transactions. For example, while it is costly
to collect information on patient experience, these measures provide direct
information about the patient-centeredness of care at both the practice and
provider levels, and positively correlate with processes of care for both
prevention and disease management (Shaller et al., 2010). AF4Q sites are
working to make the results of patient experience surveys more widely
available, despite the difficulty of finding a sustainable business model for
doing so. A learning health system should focus on and promote the issues
that matter to patients and families.
Creating a Learning Culture: Some Conclusions
Although not backed by rigorous research results at this point, some
insights about how to create a learning culture within the healthcare sys-
tem have emerged from RWJF’s experience in promoting social change and
AF4Q’s experience to date:
• Test change in local markets—Although healthcare quality is obvi-
ously driven by federal and state policy, as well as private market
developments at every level, health care is delivered locally, and it
is important to gain experience in different market environments
around the country.
• Invest in message research and adhere rigorously to tested messages—
Strategic communication is a proven critical component for achiev-
ing social change (Hurley et al., 2009).
• Insist on participation by multiple stakeholders (Sequist et al.,
2008).
• Engage authentic consumer participation.
• Measure and focus on what matters.
• Value transparency.
• Do not neglect financial incentives—Although this paper has focused
on nonfinancial ways to create a learning culture, creating such a
culture is difficult in the face of payment systems that often punish,
rather than reward, learning and improvement (RWJF, 2010).
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