Paper of the Week: 11th November 2019

This week’s blog is brought to you by: Dr Tim Wilson

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Full reference and title from the journal:

Bending the cost curve: time series analysis of a value transformation programme at an academic medical centre Chatfield SC, Volpicelli FM, Adler NM, et al. BMJ Qual Saf 2019;28:449–458.

Emerging principles for health system value improvement programmes Moriates C, Valencia V. BMJ Qual Saf 2019;28:434–437.

Authors conclusion:

By the beginning of 2014 it had become apparent that our own health system, NYU Langone Health (NYULH), had substantial opportunity to improve value. From 2010 to 2013, our institutional losses on Medicare patients had more than doubled. … the American Association of Medical Colleges-Council of Teaching Hospitals (COTH) quarterly survey of hospital operations and financial performance showed we were nearly at the 75th percentile for expense per discharge even after standardising for case mix index (CMI) and Wage Index.

The Dean and Chief Executive Officer (CEO), a single role at NYULH, formed a Value-Based Management (VBM) Task Force to ensure that NYULH not only provided the highest quality but did so at an affordable cost.

A systematic programme to increase healthcare value by lowering the cost of care without compromising quality is achievable and sustainable over several years.

3V bottom line:

The definition of value in this paper is focused on maximizing provider or shareholder value. This is insufficient for a country with universal health care. In countries with universal healthcare, any definition of value needs to reflect a commitment to reduce inequity, to contribute to society and to use resources optimally for the whole population with a need.

3VH – Implications for value:

Porter and Tiesberg[i] defined value in health care as the ratio of “outcomes achieved by an intervention” to “costs”; and defined outcomes as health results that matter to patients.  This approach is useful as a means of increasing competitive advantage and maximising provider or shareholder value. Indeed, in this paper and the accompanying viewpoint, it is clear that the authors are most focussed on maximising value to the provider through maintaining quality (and two outcome measures, mortality and 30-day readmissions) whilst reducing their costs.

NYU Langone was providing high quality care but making a financial loss. It needed to reduce costs and so instituted a programme to do so. And they called it value based healthcare based on Porter and Teisberg’s definition. There is nothing wrong with this. Providers that are making a loss are unsustainable. But we need to recognise that they are addressing provider value in this paper and accompanying viewpoint before we adopt their definition.

However, we believe that in countries with universal health care, this provider-value focus is important but insufficient because:

  • it does not consider how resources are being used for the benefit of the whole population with a need,
  • nor the benefits to society;
  • nor recognise that there are resources beyond money, including workforce, leadership time and carbon.

In the NHS, for instance, the NHS Constitution starts with:

“The NHS belongs to the people…”

and goes on to outline seven key principles:

  1. providing a comprehensive service, available to all
  2. access to services is based on clinical need, not an individual’s ability to pay
  3. aspires to the highest standards of excellence and professionalism
  4. put patients at the heart of everything it does
  5. committed to providing best value for taxpayers’ money and the most effective, fair and sustainable use of finite resources
  6. accountable to the public, communities and patients that it serves

Excerpt from the NHS Constitution

We would argue that any definition of value, that helps fulfil principle 6, needs to reflect value from the perspective of principles 1-5.

There are many ways of increasing value; improving technical efficiency through productivity, quality and safety and cost-effectiveness programmes, or by increasing allocative efficiency.

At 3V we believe that principles 1-5 of the NHS Constitution can be achieved by addressing three dimensions of value. But we would be keen to have a debate on this:



[i] Porter, M. E., & Teisberg, E. O. (2006). Redefining health care: creating value-based competition on results. Harvard Business Press.