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Value-Based Health Care Delivery: The Role of Pathology

August 1, 2015

 

The 23rd Annual Health Forum and the American Hospital Association Leadership Summit recently took place in San Francisco. This year’s theme was “Rewriting the Healthcare Playbook: Leading Transformation and Innovation”.

 

The audience included healthcare executives, those from the C-suite, quality improvement, risk management, patient safety, IT and marketing fields. These are important figures pathologists need to engage. In order to demonstrate the value of pathology one must understand the definition of value.

 

Dr. Michael Porter, Bishop William Lawrence University Professor at The Institute for Strategy and Competitiveness, based at the Harvard Business School, http://www.isc.hbs.edu/Pages/default.aspx gave a keynote talk titled “Redefining Health Care: Creating Value-Based Competition on Results”.

 

What is Value?

 

According to Porter, the core purpose of health care is value for patient. Value can be defined as:

 

Value = (Health outcomes that matter to patients) / (Costs of delivering those outcomes)

 

 

 

As health care transitions from volume to value, every link in the care cycle must prove value. Pathology is no exception.

 

An example of value in pathology is test utilization. Pathologists can impact both factors in the value equation, such as through utilization projects. Many clinicians are unaware of costs of laboratory testing. Through education of clinical colleagues, pathologists can impact utilization. As a result patients receive a more appropriate test, a quicker diagnosis and for less cost. In short, a more efficient care cycle is created. This valuable clinician education ensures more appropriate future test ordering, teaches cost awareness and becomes a self sustaining model.

 

Setting the Right Goal

 

Porter stresses that value is created in caring for a patient’s medical condition over the full care cycle. It is not that provided by any individual component (i.e. hospital, site of service, specialty, care episode or intervention) but rather the cumulative value over the entire cycle of care. Based on the value equation, one can improve value through impacting outcomes while decreasing costs. However, one must make sure that the correct outcome is being measured. The most important outcomes are those that matter to patients.

 

The lab is the heart of the hospital, with over 70% of information in the medical record derived from laboratory testing. So called “big data” is generated and stored in the lab. This data is a valuable resource crucial to any outcomes analysis.

 

Pathologists are keenly aware of costs of tests, whether it be low cost high volume tests (i.e. electrolytes, liver function, etc.) or high cost low volume tests (i.e. molecular, genetic teting). Small changes can make a big difference towards improving outcomes, driving down costs and increasing value.

 

However, the lab is one part of the entire care cycle. Pathologists can, and must, assist other clinical colleagues to do the same by facilitating data analysis and cost accounting.

 

 

The Strategic Agenda

 

Michael Porter describes 6 steps to create a value-based health care delivery organization. These are important lessons for the lab and all pathologists. Pathology intersects all major medical specialities. In so doing, pathology can offer clinical colleagues assistance in the shift from volume to value as we ourselves make the transition. Pathology ties many specialites together by way of the laboratory. This is important in setting the stage for measuring outcomes.

 

 

1. Organize Care Around a Patient’s Condition

 

The first requirement for value-based health care is to organize care around a patient’s condition. One such example is head and neck cancer care at MD Anderson Cancer Center. Rather than organize care by specialty or service, care is organized around a specific condition. In this model care is delivered by a dedicated multidisciplinary team (integrated practice unit) specialized in treating the particular condition. The team is responsible for the full cycle of care, actively engages the patient in their care and measures outcomes. As can be seen from the diagram, pathology plays a major role.

 

2. Measuring Outcomes and Costs for Every Patient

 

 

The need to measure outcomes and costs for every patient, what Porter terms the “Quality Measurement Landscape”, is another ingredient for value based health care. This should be familiar to many pathologists. With a solid background in process improvement and quality principles, pathologists routinely perform such analyses in the lab.

 

 

 

Porter describes a tiered approach to considering outcomes. In this “Outcome Measures Hierarchy” important metrics are measured throughout the care cycle. A pathologist is uniquely positioned along a patient’s journey through this care cycle to bear witness to each of these tiers in the hierarchy.

 

Measuring the Costs of Care

 

Acutal expense, not the charges, are what matter in the value equation. Again this is another concept well known to pathologists. Pathologists routinely perform cost analyses when considering testing options for in-house vs. reference lab testing. This involves careful mapping of the care cycle, just like one would do for a process improvement project, root cause analysis or other quality initiative.

 

 

 

Next, costs and outcomes must be mapped to compare overall value, such as that illustrated by local prostate cancer care at MD Anderson Cancer Center. This involves a team approach. According to Porter, such cost reduction initiatives will often lead to improved outcomes. I challenge you to envision and implement a similar framework. Leverage your skill set and demonstrate your value by providing value. Where are the opportunities in your practice?

 

3. Bundled Payments

 

Bundled payments are crucial to achieving value based health care. In a bundled payment system a single price is payed for the full care cycle for a medical condition.

 

Opportnities exist for pathologists in the management of acute and chronic conditions at both the individual patient and population level. Pathologist can help foster preventative health care initiatives which is important in driving down costs. In additon to educating clinicians about test utilization, important health maintenance tests must also be stressed, i.e. Pap smears, lipid panels, A1c, etc.

 

4. Integrate Care Delivery Systems

 

Also important is the integration of care delivery system so that the right care is delivered at the right location. This involves concentrating volume in fewer locations, with skills matched to condition.

 

Again, important lessons are evident for pathologists. Subspecialization within a large group ensures those with specific skills are signing out cases in their field.

 

5. Expand Geographic Reach

 

The fifth element to effective value based care is to expand the geographic reach of a health system. The Cleveland Clinic model is a good example of how this can be implemented.

 

6. Integrated Information Technology

 

Finally, one must utilize information technology to enable restructuring of care delivery and outcomes measuring. The lab often is the center for much of a hospital’s IT infrastructure. Pathologists can play a major role in the team effort to deliver value by leveraging the lab IT system.

 

 

 

A Mutually Reinforcing Strategic Agenda

 

These six strategies are mutually reinforcing according to Porter. As the health care world transitions from fee for service to bundled payment, all clinicians need to recognize these principles. Change is happening, embrace it, step up to the challenge, prove your value and make yourself invaluable.

 

Such projects on a small scale have large ramifications and can be easily translated to large scale. Change is contagious. Create a culture of quality and foster change.

 

For more information, please consult the following references.

 

Case studies and curriculum guide available at: http://www.isc.hbs.edu/resources/courses/health-care-courses/Pages/health-care-curriculum.aspx
Porter, M.E. (2010). What Is Value in Health Care? New England Journal of Medicine. http://www.nejm.org/doi/full/10.1056/NEJMp1011024
Porter, M.E. and Lee, T.H (2015). Why Strategy Matters Now. New England Journal of Medicine. http://www.nejm.org/doi/full/10.1056/NEJMp1502419
Porter, M.E. and Lee, T.H. (2013). The Strategy that Will Fix Health Care. Harvard Business Review. October 2013. https://hbr.org/2013/10/the-strategy-that-will-fix-health-care

The author thanks Dr. Michael Porter for providing images and content.

 

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