A Call to Action: Healthcare Value Alliance

To stimulate innovation to advance clinical care, outcomes, equity, and moderate cost

Peter Pronovost, MD, PhD, Chief Clinical Transformation and Chief Quality Officer, University Hospitals Cleveland; Professor, Department of Anesthesiology and Critical Care Medicine, School of Medicine, Francis Payne Bolton School of Nursing, Case, Weatherhead School of Management, Western Reserve University

James Weinstein, DO, MS, SVP Health Care, Microsoft

Leigh Anderson, PhD, President, Premier

Balaji Ramadoss, PhD, President, Edgility, Cognitive Healthcare (Medium profile)

Covid-19 is an insidious virus, wreaking havoc around the world, particularly among lower income and older populations, accelerating the urgent need for every payor of health care to improve the value of healthcare. This post explores the creation of a Healthcare Value Alliance to stimulate innovation that advances clinical care, improves health equity and outcomes, and reduces costs.

For over a century, health care has urgently needed to improve quality and reduce costs. Progress in achieving this goal has been slow, arduous, and devilishly difficult. The cost of health care for every payor, whether the Federal government, state government, municipalities, private companies, or individuals, is increasing more than their revenue or income, while the Affordable Care Act Medical Loss Ratio rule has narrowed insurance company margins. Today, just under 50% of insurance is employer-based and Medicare for all, if adopted, will cause even more cost shifting to employers and the public. Covid-19 affirms the need to improve health care quality and reduce costs. Every employer, provider, and payor (public or private) of health care needs to cut costs and improve the health of their work force.

Covid-19 has laid bare the variation in utilization and quality of care and exacerbated existing inequities in health and health outcomes. Improvements in health care value will only emerge if we as a society adopt efforts to address the more important offenders of poor health, the social determinants of health, and the true barriers to health.

Who should lead the much-needed change?

Health systems need to lead, as they have the most direct impact on health care utilization, costs, and quality, and therefore, have the largest responsibility to improve, but they cannot do this alone. Much work lies ahead. A Healthcare Value Alliance, or HVA, could make uncompromising improvements in value through a disciplined approach to making visible and eliminating defects in value, including inequities. The HVA will need to address existing barriers to innovation in value. We review these barriers below and suggest three areas of focus and five deliverables for the HVA to make inclusive, sustainable improvements in health care value.

Barriers to Innovation and Value

Failure to embrace systems engineering and implementation science. Health care largely views research as basic or clinical research, yet neither embraces nor invests in systems engineering, the delivery science of care. Health care is a complex system of systems, and yet, other safety vigilant industries embrace systems engineering, ensuring the constituent parts are connected to achieve a purpose. Health care often lacks robust mechanisms to translate effective therapies into clinical practice and to learn from daily work. As a result, healthcare organization leaders are at times ambiguous about their intent and askew their favor toward filling hospital beds to maintain margins. Clinical variation can lead to patient harm and waste. The care patients receive is too often transactional and/or reactive rather than proactive, relational, and representative of what a well-informed patient wants and needs. More care is not always better care. In fact, where we spend more, the quality of care is often less.

Lack of a robust operating management system or operating model. Many systems lack operating models that define the governance and structures, the ways of working and capabilities (people, processes, technologies) needed for such a system to improve value. For example, who is accountable for reducing hospitalizations for patients with chronic diseases and for reducing per person annual health expenditures? What structures exist for coordinating care among hospital, ambulatory, post-acute, home health, and unplanned visits? What capabilities exist to detect and eliminate defects in value? Defects such as failing to help people stay well (e.g., immunization, cancer screenings, and fall prevention [hip fractures] at home), and failing to help people with chronic diseases get well (e.g., diagnosing people with diabetes, controlling their A1C, blood pressure and lipids, and avoiding preventable hospitalizations). Structures are needed to help people get better, such as ensuring the use of appropriateness criteria for procedures, ensuring optimal site of care for the patient, which may be home rather than a hospital or skilled nursing facility, and coordinating care with primary care providers. In addition, what governance, structures, and capabilities exist to detect and eliminate health inequities? The HVA will have robust operating models.

Lack of knowledge processes. To improve value, health systems need technology systems that integrate claims, electronic medical record, and other sources of data to provide real time performance on key operational behaviors, quality monitoring and review of cost and utilizations, and the ability to stratify the data by patient, provider, and disease. Cognitive computing platforms can meet this need and deliver information via mobile phones, to local operating centers, and to system operations centers. Yet these types of data infrastructures are expensive to build and maintain. A consortium of health systems, similar to the High Value Healthcare Collaborative, could likely do this more effectively and efficiently by having a staff of highly skilled data scientists, negotiating better licensing prices, and achieving economies of scale. The HVA will work with technology partners to provide real time information to monitor value

Lack of financial incentives and transparent measures of value to improve value. Fee for service medicine is a barrier to improving value. For example, preventable hospital admissions are still counted as a positive. Nonetheless, health care is rapidly moving to pay for value, and ever-increasing amounts of care and total dollars are under a value-based arrangement. In addition, transparent measures of value are largely absent, limiting competition to improve value.

One major benefit of these financial arrangements, such as an accountable care organization or other arrangement is that people are attributed to a health care provider system. It is difficult to coordinate care and improve value when patients receive care from multiple providers at different health systems. All of these arrangements put some responsibility on a health system for quality and annual total cost of care. The provider can then integrate electronic medical record data with claims to monitor quality, utilization, and annual total cost of care. The HVA will seek to grow these types of relationships and mandate transparent measures of value.

Lack of payment policy and regulations that support innovation and value. Too often regulations hinder innovation that can improve value. For example, CMS only covers home health nursing for homebound patients. Thus, patients who require IV antibiotics but are not homebound are often sent to a more costly and risky Skilled Nursing Facility so that CMS will pay for the care. Covid-19 has prompted CMS to implement multiple changes that stimulated innovation and paying for high value. For example, they pay for telemedicine and for only two days of home monitoring for Covid-19 patients rather than the required 16-day monitoring for a chronic disease. As new innovations that improve value emerge, CMS needs to remove regulatory and payment barriers to support the growth of that innovation.

Lack of a robust innovation ecosystem. Despite spending heavily on technology, health care still has negative labor productivity, costs are increasing more than the GDP, and preventable harm remains a major cause of morbidity, mortality and suffering. The current Fee for Service venture model has not delivered scalable improvements in value. This is because neither capital nor technology are the barriers. We can solve most of health care needs with existing technology.

The barriers are design, usability, and scale. Health care lacks models to create an ecosystem to incent partnerships between health systems and technology companies, where incentives align to design, prototype, implement, and evaluate information technologies and ensure they fit into evidence-based clinical workflows that lead to the best outcomes. Moreover, current venture models to often focus first on a technology or procedure and then seek a problem to solve. While that is important, health care also needs to start with a problem, a defect in value, and find technology solutions for that problem. Venture capital focuses on relatively focused, small problems, easily solved in 3 to 5 years with $10 to $20 million in funding. These funded innovations are producing mostly apps. To reduce preventable harm and waste in health care and improve value is a complex problem, which will require integrating multiple technologies, longer project durations, larger amounts of capital, and multiple technology partners.

Moreover, while every other sector of health care is consolidating and forming partnerships. Many health systems remain isolated, purchasing community hospitals rather than aligning with other integrated systems to demonstrate value-based networks. The investments needed to produce high-value care are likely too large for any health system to do alone. The HVA will partner with venture capital funders to create an ecosystem for innovation in value. It will provide financial incentives for health systems that chose to pilot and prototype a technology and for members of the alliance to deploy it.

The HVA will create a new company with health system members as investors, along with Premier and venture funds to address these barriers to innovation. This new company will have a Services and Technology arm to help members eliminate defects in value across their care delivery system and will have a Venture Fund to stimulate an innovation market that improves value. It will also have technology partners to help make performance on value transparent so that the market can compete on value.

Below are the three focus areas and five deliverables that require commitment from HVA members.

Focus 1: Commit to lead in value

HVA members must demonstrate leadership in committing to eliminate defects in value and inequities and leverage innovation to make further improvements in value. Health care is now 20 % of the US economy and 7 trillion dollars globally. The health care landscape has not changed much in the 20 years since To Err is Human reported 40,000 to 98,000 deaths annually from medical errors. Though the exact number of deaths is unknown, it is to be far higher. Though we do not know how many people die from medical errors, it is likely the third leading cause of death in the US. Patients, on average, receive only 60% of recommended therapies and 10% of patients suffer preventable harm from their interactions with a health care that remains transactional and reactive rather than relational and reactive. It is estimated that some 30% of every health care dollar is wasted, representing over a trillion dollars in the US annually, and health care has by its nature created negative labor productivity, despite spending heavily on technology.

Focus 2: Use of systems engineering to redesign systems and create innovation markets

HVA members must embrace systems engineering and innovation to improve value. Health care is commonly described as a system, a system is a set of parts interacting to achieve a goal. Health care has the parts, yet these parts do not effectively interact to reach the goal. Rather, health care optimizes the parts, such as filling hospital beds, while compromising the whole, keeping people healthy. These shortcomings incorporate people, processes, technology, and governance.

Across the US, nurses spend 22% of their time hunting for supplies and 24% answering false alarms. On average, physicians and nurses spend 40% of their shift documenting in the medical record. Twenty years ago, 3,000 employees staffed a well-known 1,000-bed health system. Today, 12,000 employees staff the same system, despite the same number of discharges. No other industry has this kind of negative productivity. Existing technologies, process improvement, and appropriate accountabilities should help eliminate much of this waste. Having the right people working at the top of their license is no longer nice it is a requirement. Doctors need not do the work others can do and consumers/patients need to actively engage in their care.

Moreover, mindless variation in care processes, including how, where, and to whom care is delivered results in significant preventable harm and higher costs. A systems approach to care would make these defects in value visible in real time so these could be mitigated.

HVA members will be able to invest in a venture fund. The health system that agrees to pilot test an innovation will receive additional equity. This approach will help stimulate health systems to prototype, implement, and evaluate technologies and create a market to implement innovations.

Focus 3: Focus on wellbeing and social needs

HVA members must focus on the wellbeing and social needs of society as a whole. Health and health care are essential drivers of a nation’s economic success. Let’s be clear, health care represents only 20–30% of health, whereas personal health behaviors and socioeconomics of a society makes up the vast portion of a nation’s health. Social needs impact a person’s access to health care and their ability to live healthy habits. It is exceedingly difficult to eat healthy if you live in a food desert. A healthy nation is a strong nation, a strong nation is a healthy nation. Absence of health for all, is the reason many are suffering from Covid-19. If the US improved our healthy behaviors we could add 10 to 14 years to our life expectancy.

Today, we are seeing glaring examples where we have failed to support employee wellbeing especially for the economically vulnerable. Our nursing homes, meat packing plants, and migrant workers clearing the fields, name a few vulnerable populations. For decades we have had at least two countries represented within a country. We have zip codes in the US, many concentrated along the east and west seaboards and some in the northern states in which the population health is good, while zip codes in the southern, rust belt states and southern seaboards live in a poorer state of health. Work of the Dartmouth Atlas Project has pointed to these painful differences for decades, only to be recognized for its academic effort not for its strategic direction and impact if understood and acted upon. This is no longer academic — this is life and death information and requires a real, sustained commitment with a short- and longer-term business plan that works.

HVA members must also commit to the following five deliverables.

  1. Provide a self-sustaining, profitable, evidence-based, continuously innovating and improving value-based health and health care to all
  2. Create a competitive, transparent health care market by publicly sharing information regarding current health and health care of our nation
  3. Make transparent and call out current inequities, e.g., premature infants, infant mortality, gun violence
  4. Establish partnerships to create a sustainable business model that will execute an actual business plan for health that achieves the purpose of the alliance, enhancing people’s wellbeing and improving health care value. This includes working with CMS. If done well we should reduce health care expenditures by 20% over 5 years.
  5. Transparently report all data to support the transformation of the current health system to an integrated and sustainable accountable health system with the people as shareholders.

This type of value alliance does not exist in the market. Several companies provide health care benchmarking data and consultancy services to help improve value. Often, these services create collaborations on health systems. Recently, innovation-based consortiums emerged, helping health systems realize value from technologies or find new technologies, providing subscription to a curated innovation marketplace and the opportunity for investing and pilot testing. While all of these provided modest improvements in value, there remains significant opportunity to improve value and accelerate innovation and to integrate performance and comparative data.

There is a need in the marketplace for a new offering, a Healthcare Value Alliance to leverage performance and benchmarking data to better align with technology and innovation. Combined with a novel operating model driven by goals, enablement, engagement, and transparency and a value innovation fund that aligns the incentives for technology companies, investors, and alliance members to innovate, the HVA will be an offering for healthy systems committed to significantly improving value for all.

Health care can be so much better than it is today, with more people thriving and fewer suffering, with care costing less while providing more services. One health system cannot do this alone. With an alliance of health systems, technology partners, and capital partners, we can transform health care. As an Aspen Ideas report on education reform so eloquently phrased it, “in any collective human endeavor there comes a moment; a moment when we know so much more about what to do; a moment when collective voices align around a common purpose; a moment when we can make the possible real.” The moment to improve value in health care is now. Words are not enough; they do not substitute for action. We need action. The HVA is the transformational action for transformational times.

Peter Pronovost, MD, PhD, is a world-renowned patient safety champion, critical care physician, prolific researcher with more than 800 peer-reviewed publication