What is value in healthcare?

  • Posted on 15.12.2010

What is value in healthcare?


John Wilkinson

Former Chief Executive of Eucomed

Value defined

When one of the defining minds of business education in recent years turns his attention to healthcare then people would be wise to sit up and listen. Harvard Business School guru Michael Porter first entered the impenetrable world of health policy in 2006 in a book with colleague Elizabeth Teisberg entitled ‘Redefining health care: creating value-based competition on results’. This work sets out the thesis that competition is good because all elements of the system will be encouraged to improve in an environment where performance is transparent.

All well and good you might say. But how do we measure performance? Porter has subsequently continued to try to and help define value and earlier this month threw more light on the subject in an article in the New England Journal of Medicine entitled ‘What is value in health care?’. This makes interesting reading as he identifies the lack of coherent goals between stakeholders as the key reason why health systems fail to improve performance. As he says, different players have widely differing and often conflicting goals ‘including access to services, profitability, high quality, cost containment, safety, convenience, patient-centeredness and satisfaction’. Rightly, he proposes a unifying measure of value which, in theory, should unify all of the players and allow real progress to be made in a measurable way. He defines value as ‘health outcomes achieved per dollar spent’ and espouses a holistic approach to traversing the various healthcare delivery points that interact with a patient with any particular condition.

Strikingly, Porter states that ‘since value is defined as outcomes per unit cost, it encompasses efficiency. Cost reduction without regard to outcomes achieved is dangerous and self-defeating, leading to false “savings” and potentially limiting effective care’.

The current climate in many parts of Europe for arbitrary cost-cutting exercises is dangerous. Instead the focus needs to be on true innovation which leads to Porter’s improved outcomes relative to cost. To do this, all of the stakeholders need a better mutual understanding and need to share goals. This can only arise out of better dialogue between the parties and development of methodologies suggested by Porter to inform evidence-based decision-making but not just in the clinical domain. Tough stuff but the sooner we get on with meaningful measures of performance and value the sooner we will make a dent in the sustainability challenge.

– John Wilkinson, Eucomed Chief Executive

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