Redefining health care : creating value-based competition on results

The U.S. health care system is in crisis. At stake are the quality of care for millions of Americans and the financial well-being of individuals and employers squeezed by skyrocketing premiums--not to mention the stability of state and federal government budgets.

In Redefining Health Care , internationally renowned strategy expert Michael Porter and innovation expert Elizabeth Teisberg reveal the underlying--and largely overlooked--causes of the problem, and provide a powerful prescription for change.

The authors argue that competition currently takes place at the wrong level--among health plans, networks, and hospitals--rather than where it matters most, in the diagnosis, treatment, and prevention of specific health conditions. Participants in the system accumulate bargaining power and shift costs in a zero-sum competition, rather than creating value for patients. Based on an exhaustive study of the U.S. health care system, Redefining Health Care lays out a breakthrough framework for redefining the way competition in health care delivery takes place--and unleashing stunning improvements in quality and efficiency.

With specific recommendations for hospitals, doctors, health plans, employers, and policy makers, this book shows how to move health care toward positive-sum competition that delivers lasting benefits for all.

Author Notes

Michael E. Porter is the Bishop William Lawrence University Professor at Harvard Business School and the author of sixteen books and numerous articles on competition and strategy.

Elizabeth Olmsted Teisberg is an associate professor at the University of Virginia's Darden Graduate School of Business and author of over fifty articles and cases on strategy and innovation.

List of Figures	p. x
List of Boxes	p. xii
Preface	p. xiii
Introduction	p. 1
The Failure of Competition	p. 3
Competing on Value	p. 4
Competing on Results	p. 6
The Structure of This Book	p. 9
How Will Redefining Health Care Occur?	p. 13
1 Scoping the Problem	p. 17
2 Identifying the Root Causes	p. 33
Positive-Sum Competition on Value	p. 33
Zero-Sum Competition in Health Care	p. 34
The Root Cause: Competition at the Wrong Level	p. 44
Why Is Health Care Competition at the Wrong Level?	p. 46
3 How Reform Went Wrong	p. 71
The Rise of Group Health Insurance	p. 71
Limiting Payments to Physicians and to Hospitals	p. 74
Managed Care	p. 76
The Medical Arms Race	p. 78
The Clinton Plan	p. 79
Patients' Rights	p. 81
Consumer-Driven Health Care	p. 83
Quality and Pay for Performance	p. 84
A Single-Payer System	p. 88
Medical or Health Savings Accounts	p. 90
Non-Reforms	p. 93
Reforming Competition: The Only Answer	p. 95
4 Principles of Value-Based Competition	p. 97
Focus on Value, Not Just Costs	p. 98
Competition Is Based on Results	p. 101
Competition Is Centered on Medical Conditions over the Full Cycle of Care	p. 105
High-Quality Care Should Be Less Costly	p. 107
Value Is Driven by Provider Experience, Scale, and Learning in Medical Conditions	p. 111
Competition Is Regional or National	p. 117
Results Information Is Widely Available	p. 122
Innovations That Increase Value Are Strongly Rewarded	p. 140
The Opportunity of Value-Based Competition	p. 147
5 Strategic Implications for Health Care Providers	p. 149
The Strategy Vacuum in Health Care Delivery	p. 150
Defining the Right Goal: Superior Patient Value	p. 155
Moving to Value-Based Competition: Imperatives for Providers	p. 157
How Would Industry Structure in Health Care Delivery Change?	p. 200
Enabling the Transformation	p. 202
Overcoming Barriers to Value-Based Competition	p. 218
The Benefits of Moving Early	p. 227
6 Strategic Implications for Health Plans	p. 229
Past and Future Roles of Health Plans	p. 230
Moving to Value-Based Competition: Imperatives for Health Plans	p. 239
Overcoming Barriers to Health Plan Transformation	p. 275
The Benefits of Moving Early	p. 281
7 Implications for Suppliers, Consumers, and Employers	p. 283
Implications for Suppliers	p. 284
Implications for Consumers as Subscribers and Patients	p. 295
Implications for Employers	p. 304
8 Health Care Policy and Value-Based Competition: Implications for Government	p. 323
Broad Issues in Health Care Policy	p. 327
Moving to Value-Based Competition: Improving Health Insurance and Access	p. 329
Moving to Value-Based Competition: Setting Standards for Coverage	p. 338
Moving to Value-Based Competition: Improving the Structure of Health Care Delivery	p. 341
Implications for Health Care Policy in Other Nations	p. 374
Conclusion	p. 381
Appendix A Making Results Public: The Cleveland Clinic	p. 387
Appendix B The Care Delivery Value Chain	p. 397
Notes	p. 413
Bibliography	p. 445
Index	p. 489
About the Authors	p. 507

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