Porter, M.E. (2005). Redefining Health Care: Creating Value-Based Competition on Results. In: IHI IMPACT Spring Leadership Meeting. Boston, 27-28 June 2005. Boston: Harvard Business School. 원문보기

자료정리: 김예영

The Paradox of U.S. Health Care

  • The United States has more competition than virtually any other health care system in the world


  • Costs are high and rising
  • Services are restricted and fall well short of recommended care
  • In other services, there is overuse of care
  • Standards of care often lag or do not follow accepted benchmarks
  • Preventable treatment errors are common
  • Huge quality and cost differences persist across providers
  • Huge quality and cost differences persist across geographic areas
  • Best practices are slow to spread
  • Innovation is resisted

⇒ How is this state of affairs possible?

Issues in Health Care Reform22.png

Zero-Sum Competition in Health Care

  • Competition to shift costs
  • Competition to increase bargaining power
  • Competition to capture patients and restrict choice
  • Competition to reduce costs by restricting services

⇒  None of these forms of competition increase value for patients

  • Gains of one system participant come at the expense of others
  • These types of competition reduce value through added administrative costs
  • These types of competition result in inappropriate cross subsidies in the system
  • These types of competition slow innovation
  • Adversarial competition proliferates lawsuits, with huge direct and indirect costs

The Root Causes

  • Competition in health care is not aligned with value for patients
  • Competition in the health care system takes place at the wrong level on the wrong things

Between health plans, networks, hospitals, and government payers

In the diagnosis, treatment and management of specific health conditions for patients

  • Competition at the right level has been reduced or eliminated by health plans, by providers/provider groups, and by default
  • Efforts to improve health care delivery have sought to micromanage providers and level the playing field rather than foster provider competition based on results

Recent quality and pay for performance initiatives do not address quality directly, but process compliance

Why Competition Went Wrong?

  • Wrong definition of the product: health care as a commodity, health care as discrete interventions/treatments
  • Wrong objective: reduce costs (vs. increase value) –Piecemeal view of costs
  • Wrong geographic market: local
  • Wrong provider strategies: breadth, convenience and forming large groups
  • Wrong industry structure: mergers and regional consolidation, but highly fragmented at the service level
  • Wrong information: patient satisfaction and (recently) process compliance, not prices and results
  • Wrong patient attitudes and incentives: little responsibility
  • Wrong health plan strategies and incentives: the culture of denial
  • Wrong incentives for providers: get big, pay to treat, reward invasive care

  • Employers went along: discount, minimize annual cost increases, push costs to employees

The Evolution of Reform Models


Principles of Positive Sum Competition

  • The focus should be on value for patients, not just lowering costs.

–Improving quality in health care usually also lowers cost

  • There must be unrestricted competition based on results.
  • Competition should center on medical conditions over the full cycle of care.
  • Value is driven by provider experience, expertise, and uniqueness at the disease or condition level.
  • Competition should be regional and national, not just local.
  • Results and price information to support value-based competition must be collected and made widely available.
  • Innovations that increase value must be actively encouraged and strongly rewarded

Value-Based Competition: Issues for Providers

  • Many providers see themselves in the wrong business
  • Provider strategies, organizational structures, and management practices are not well aligned with delivering value for patients
  • Providers lack the most important information to manage their practices

The Virtuous Circle in Health Care Delivery


Moving to Value-Based Competition Providers

  1. Redefine the business around medical conditions
  2. Choose the range and types of services provided based on excellence in value, both within and across locations
  • Deliver care at the right location
  • Separate providers and health plans
  1. Organize and manage around medically integrated practice areas
  2. Create a distinctive strategy in each practice area
  3. Design care delivery value chains that enable these strategies and continually improve them
  4. Collect comprehensive information on results, methods, experience, and patient attributes for each practice area, covering the complete care cycle
  5. Accumulate costs by practice area and value chain activity over the care cycle
  6. Build the capability for single billing for cycles of care, and bundled pricing
  7. Market services based on excellence, uniqueness, and results at the practice area level
  8. Grow in areas of strength both locally and geographically, using a medically integrated care delivery approach

Transforming the Roles of Health Plans

Old Role New Role
•Restrict patient choice of providers and treatment

•Micromanage provider processes and choices

•Minimize the cost of each service or treatment

•Engage in complex paperwork and administrative transactions with providers and subscribers to control costs and settle bills

•Compete on minimizing premium increases

•Enable informed patient and physician choice and patient management of their health

•Measure and reward providers based on results

•Maximize the value of care over the full care cycle

Simplify payments dramatically, and minimize the need for administrative transactions in the first place

•Compete on subscriber health results