Michael Porter on Paving the Way for Value-Based Health Care

Summary

In this insightful discussion, Michael E. Porter and Thomas Lee delve into the complexities of the healthcare system, highlighting the importance of value-based healthcare over cost reduction. They emphasize the need for a systemic approach, integrating various medical interventions for better patient outcomes. The conversation underscores the universality of healthcare delivery issues across different countries and the potential of outcome measurement to drive improvement. They also discuss the challenges of mindset change, data scarcity, and stakeholder misalignment, stressing the urgency of evidence-based progress in healthcare.

Takeaways

• 🏥 The interview discusses the personal journey that led to an interest in healthcare and the dysfunctions within the healthcare delivery system.
• 🤔 The healthcare industry is filled with highly qualified and innovative individuals, yet it struggles to achieve expected outcomes despite their expertise.
• 🔍 The issue in healthcare is not a lack of effort or commitment but rather the system in which medical professionals operate.
• 🧬 Medical professionals are trained narrowly as scientists, focusing on specific procedures and interventions, which reinforces the current system's limitations.
• 🌐 The mindset of viewing healthcare as a whole system is lacking, which is crucial for understanding how to integrate various interventions for success.
• 💸 The concept of value-based healthcare is introduced as a shift from focusing on cost reduction to improving patient outcomes.
• 🌟 Positive change is possible, as seen in a Swedish hospital that improved myocardial infarction outcomes dramatically by focusing on value.
• 📊 Outcome measurement is central to value improvement, and transparency in outcomes leads to significant improvements in healthcare delivery.
• 🌎 Despite differences in insurance systems, the problems in healthcare delivery are universal across different countries.
• 🚀 The potential for progress in healthcare is immense, but it requires a shift in mindset, better data on outcomes and costs, and alignment of stakeholders.

Q & A

What triggered Michael's interest in healthcare?

Michael's interest in healthcare was triggered by discussions with Elizabeth Heberg, a co-author and strategy professor at Harvard Business School, who had children with serious medical issues. These discussions highlighted the dysfunctions of the healthcare delivery system.

How does Michael view competition in healthcare?

Michael is a strong believer in competition as a force for improvement in human endeavors. However, he finds it puzzling that competition does not seem to be working effectively in healthcare.

What does Michael think is the reason for the lack of innovation in healthcare despite many qualified individuals?

Michael suggests that the lack of innovation is due to medical professionals being put in a system that doesn't allow them to be successful and a narrow scientific training that reinforces the current system.

What is Michael's opinion on the mindset of medical professionals?

Michael believes that medical professionals are trained narrowly as scientists, focusing on specific procedures and interventions, which has reinforced the current system rather than fostering innovation.

How does Michael perceive the reaction of physicians to cost pressures?

Michael observes that many physicians feel uncomfortable focusing on cost and have become cynical and disengaged rather than engaging in change.

What is the starting principle of value-based healthcare according to Michael?

The starting principle of value-based healthcare is focusing on value rather than cost. The goal is to improve patient outcomes, which in turn can reduce costs in the long term.

How does Michael think value-based healthcare can change the current healthcare system?

Michael believes value-based healthcare can shift the focus from a zero-sum competition to a positive-sum competition where all parties benefit if value is proven.

What was the outcome of the case study in a Swedish hospital mentioned in the script?

The case study in a Swedish hospital showed that when challenged with poor performance on myocardial infarction, the hospital improved outcomes dramatically by reducing mortality by a significant percentage within a year.

What does Michael think about the universality of healthcare delivery problems?

Michael finds that despite differences in insurance systems, the problems of healthcare delivery are virtually identical across different countries due to similar training and development of medical sciences.

What is Michael's view on the current U.S. healthcare reform in relation to value-based healthcare?

Michael is optimistic that the U.S. healthcare reform has started down the path towards value-based healthcare, with a focus on outcome measurement and a new head of Medicare who is a pioneer in quality improvement.

What are the three most important barriers Michael identifies for the implementation of value-based healthcare?

The barriers include changing the mindset to focus on value improvement, a lack of outcome data and cost understanding, and misalignment of stakeholders due to the current incentive structure.

What does Michael predict will happen to the U.S. healthcare system if value thinking is not integrated into the reform?

Michael predicts that without value thinking, the U.S. healthcare system will face exploding costs, leading to random reimbursement cuts, rationing of care, and other negative outcomes.