The search for value healthcare is taking a new turn as Blue Cross Blue Shields of Massachusetts forces hospitals to realign their strategies from a focus on efficiency to one on patient outcomes.
As the largest payer in the state, BCBS is incentivizing hospitals to keep patients out of hospital beds. The future of this pilot program at South Shore Hospital is still uncertain, but it looks promising.
Video Spotlight: Value-Driven Outcomes: A program to reduce hospital costs
This post is based on the Boston Globe article, Blue Cross Wants To Reward Hospitals – For Keeping Patients Out of Hospitals, by P. Dayal McClusky, October 29, 2018, and the KSAT video, Value-Driven Outcomes: A program to reduce hospital costs, by Ivanhoe Newswire, January 27. 2017. Image source: Comstock/Getty Images.
1. How is the new program supposed to bring more value to the patient?
Guidance: According to Michael Porter (2013, p. 52), value is “health outcomes achieved that matter to patients relative to the cost of achieving those outcomes.” To insured patients, the monetary costs include premiums, deductibles, and co-payments. Hospital cost increases are transferred to patients through higher premiums and other out-of-pocket expenses. As for uninsured patients, hospital stays may lead to serious financial hardship. The new plan also includes rewards to hospitals that improve outcomes.
The combination of an increase in the numerator and decrease in the denominator of the value ratio improves value to the patient.
Source: Porter, M. E., & Lee, T. H. (2013, October). The strategy that will fix health care. Harvard Business Review, 91, 50-70.
2. According to the article, how can hospitals decrease the incidence of waste or non-value-added services?
Guidance: Diverting non-urgent patients from the emergency department to other, less expensive facilities; improving performance on quality measures; improving processes to stay within or under a set budget; avoiding unnecessary tests and procedures; coordinating care with other providers to improve continuity and avoid readmissions; etc.
3. The Theory of Constraints distinguishes between the activation and the utilization of a resource. Does it apply to this situation?
Guidance: A tendency in manufacturing has been to activate resources to increase efficiency artificially. A resource such as a robot can be activated to produce goods that are not needed. In that case, the resource is not useful.
In hospitals, beds are resources or capacity, and a common performance metric on dashboards is occupancy (or “activation”) rate of the bed resource. BCBS challenges the traditional notion that higher occupancy is beneficial.