Redefining Health Care: Creating Value-Based Competition on Results

The world's leading guru of competitive strategy, Michael Porter, Ph.D., has turned his sights on explaining the fundamental cause of high costs, poor quality, consumer dissatisfaction, uneven access, and skyrocketing premiums in American health care. In Redefining Health Care, Dr. Porter and business innovation specialist Elizabeth Teisberg, Ph.D. provide a thoughtful, groundbreaking framework to use genuine, value-driven competition to drive dramatic increases in quality and cost effectiveness. Unlike many wonks who foolishly believe that health care is not a market, Drs. Porter and Teisberg see competition "of a sort" at work - namely, zero-sum competition that adds little value, fosters inefficiency and poor quality, and often harms patients. Why? Because the current competitive environment is dysfunctional; serves to "shift costs, accumulate bargaining power, and restrict services;" and is ultimately misplaced - focusing on the business dynamics of providers and health plans, rather than on the diagnosis, treatment, and prevention of illness. Focusing on how to move American health care to positive-sum competition based on economic and clinical value for patients, Redefining Health Care provides a series of specific recommendations for the key players - notably, providers, health plans, employers, and Medicare / Medicaid policy makers. Drs. Porter and Teisberg challenge assumptions, think out of the box, expose the roots of health system failure, and, most importantly, provide a practical agenda for change. Redefining Health Care is an excellent piece of work, with fresh and fascinating insights.

This book is an excellent opinion piece - defining and clarifying some important ideas which are still as un-tested today as they were when it was written. The main criticisms of this book are that there are few data to support their concepts. The reason for this is no one has tried anything like the approaches they suggest in either quality improvement or safety (if we accept, for the moment that these are separate areas of activity). The whole point is that they are suggesting one point, which, I agree, they hammer and re-hammer over and over: health care *must* be devaluated, measured, paid for on the basis of outcome measured over the entire cycle of the patient's disease. Unfortunately, the best we have so far is to measure mini-outcomes. And when it comes to many kinds of cancer of CAD or stroke, etc., one procedure, one O.R. episode, or even one hospitalization is a TINY portion of the health care that the patient in question will receive. It is the wrong (narrow) focus in time and other incorrect foci that they discuss. If their ideas were in place, then someone (maybe they) will write a book evaluating how effective their ideas are. There are no data - at best we have data on very short term result. Often evaluations are based on process variables, intermediate variables, or whatever name you want for them. I'm waiting for some data to analyze.

This book has received probably disproportionate attention due to Prof. Porter's notoriety as a strategic thinking theorist. There are better overall books on healthcare policy available. In particular I recommend the Bodenheimer/Grumbach books, one on healthcare policy and one on primary care, Dr. Arnold Relman's book, A Second Opinion, Strained Mercy, an outstanding and thorough analysis of healthcare economics with particular regard to Canada's healthcare system and Pricing the Priceless a more technically-oriented economic analysis by Prof. Joseph Newhouse, among other books. I find the analysis of the USA healthcare system by Profs. Porter and Teisberg to generally be excellent, although I find it wanting in regard to their disparagement of a single-payer/single-insurer system and to their description and analysis of healthcare systems outside the USA. From my perspective private health plans play only a net negative role in the system. The authors' analysis of how the health insurance market works is quite good. However their recommendation that a system of private insurers should persist is refuted by their own analysis! A single payer/insurer system will not cure many problems of the USA system, as they clearly point out, but it does remove the inherently dysfunctional characteristics of private insurance, not least of which is its failure to meet the needs of the uninsured - a very large number - and its inherent propensity to exclude the very people who need coverage and care. The authors rightly point out that mandatory health insurance along with risk-pooling among insurers to spread the costs of those insured individuals who generate the highest costs is a "solution" to the current non-functioning system, but the same result, at lower cost and with much greater simplicity, can be achieved through a single payer/insurer. The other key aspect of healthcare - how it is delivered - is ultimately more important than the financing/insurance side. The authors provide excellent analysis and recommendations in this regard. They correctly address the aspects of the healthcare market that prevent its functioning as a "competitive" market, specifically the abysmal lack of patient information on prices for services, on outcomes of actions by providers, comparative statistics on provider performance and similar. They also provide an interesting report by the Cleveland Clinic on outcomes, i.e. results, of the Clinic's heart surgery activity. They appropriately use this as an example of the kind of reporting that is needed. The authors' analysis of healthcare systems outside the USA is skimpy and inaccurate in my opinion. The authors underplay the demonstrated efficacy of government-funded systems that outperform the USA system almost across the board in gross measures of outcomes (infant mortality and longevity) and vastly outperform the US system in regard to cost. They gloss over the fact that per capita costs in the USA are 2.5 times! the average per capita costs in other OECD countries. It is not as though the costs are say 10% above the average with comparable outcomes. They are 150% higher with worse outcomes. Instead of noting this and analyzing it thoroughly, the authors assert that waiting times and rationing of care are significant problems in those countries, assertions which are simply not borne out by the facts. Also the fact that (mostly) single-payer/insurer systems function well universally does not fit the authors' main thesis, so rather than revise the thesis based on this evidence they choose to ignore the evidence. As a consequence of these limitations I rate the book with 4 stars rather than 5. Too bad, because most of the book is excellent.

Porter is probably the most respected writer on "strategy," today. In "Redefining Healthcare" he applies his strategic thinking to a serious issue...healthcare. This is not just an academic treatment of the issue, but Porter gives real world examples of healthcare providers who are changing the way they measure quality at the level of the patient and the impact of what authors Porter and Teisberg define as Integrated Practice Units. The authors examine single payer, governmental systems strengths and weaknesses; what to do about the large number of uninsured in the US; patient responsibility; and most importantly, how to it is possible to build healthcare relationships that can show real, measurable quality at the level of the patient. Porter and Teisberg also examine the parts that insurers, hospitals, doctors, pharmaceutical/biotech companies, diagnostic equipment suppliers, and patients play in impacting both the quality and cost of healthcare. There are ways to fix healthcare, not just for the US, but on an international scope. And if you are at all concerned about the direction US healthcare is going and what true value competition in healthcare should look like, then you need to read this book.

Although this book contains fantastic information and data about the state of the current healthcare system, it gives very little specific guidance on how to improve it other than to state the obvious; that there needs to be a way to judge the value of healthcare for the patient per dollar spent, and utilize that information to improve competition. A much more novel approach to reforming healthcare is found through the Innovator's Prescription for Change, which outlines specific, step-by-step methods to achieve a measurable value for patients while improving access and lowering costs. For those who are looking to understand the current healthcare system to a greater degree, and who are wondering where the healthcare system will take us in 20+ years, the Innovator's Prescription for Change is a fantastic read.

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Great baseline for anyone who wants to understand the gamut of the healthcare market and all the key players - employers, plans, providers, consumers, suppliers. Yes it’s all covered and value based care and how to achieve VBC is well treated.

Michael Porter, of value chain and competitive advantage fame, has taken on the US health care system. Your reviewer, who is speaking from inside the system, can guarantee that both his diagnosis and his proposed fix are bang on. In short, you bring the US healthcare system in line with other industries by making information about the outcomes of healthcare available to consumers, then letting them choose. How to get there from here takes up most of the book, and it is as brilliant and thoughtful as Porter fans have come to expect. Read this one.