Redefining Health Care: Creating Value-Based Competition on Results download epub

Porter's theories on management are the bread-and-butter of management theory but he knows little about healthcare. It would be fantastic if his elegant theories worked for this industry, but they don't.

Serious flaws:
Authors: Care value should be measured by outcomes.
Reality: This is the fundamental problem with the healthcare market is that even the end-user of cannot fully assess the outcome not to mention the medical interventions' contributions to that outcome. Diseases recur and response to medical treatment varies so greatly that doctors rarely agree on the simplest courses of treatment. Only for the most common disease states will there be consensus on intervention. The authors compare the healthcare consumer to the institutional purchaser of computer systems, people that are generally IT experts. This is akin to comparing all patients to nurses.

Authors: Competition should exist at a national level.
Reality: Patients are cured locally because sick, pregnant, working people, etc., do not want to travel to another city to get specialized care. In fact, Guy David's studies show that proximity of less than half a mile holds more sway for patients than expertise. One can't purchase healthcare over the internet. Nor can patients in the bottom 50% of wage-earners travel to another metropolitan area every month to see a field expert.

Authors: Community-based hospitals repeatedly produce better outcomes than academic institutions
Reality: Patients with difficult-to-treat medical conditions are referred to or self-refer to academic medical centers so the sample group is biased.

It's no surprise that Porter missed some of the most obvious aspects of defining the problem. The acknowledgements section of the book contains few of the renowned experts in the field. The centers of knowledge do not lie in the management departments of Harvard or Darden. The authors seem to only have corroborated their theories with individuals from other industries, second-rate scholars, and politicians.

It was frustrating to have to read 411 pages of repetitive and ignorant text. While Porter has created groundbreaking theories in management (specifically of manufacturing and less-specialized service industries) he is attempting to fit his famous theories where they do not fit.

One must admire the attempt to write a comprehensive solution to the problem of the US healthcare system. However, it's an effort fraught with laziness and little introspection. The book, however, has a decent reference section. Either the authors did not read these papers themselves or chose to ignore the most salient points in the works of the field experts. If you want to real scoop, read Halvorson, Pauly, Danzon, Fisher, or anyone else who has studied this field for more than the authors' seven years.

Halvorson's Health Care Reform Now is a far superior book because it provides actionable remedies for the health care problem. Furthermore, Halvorson has 30 years of healthcare experience (compared to Porter's 3 years when he wrote this book). In addition, Halvorson has actually implemented his suggestions. Also, he cites credible organizations and publications that actually support his suggestions (RAND, IOM) whereas Porter cites and collaborates with organizations merely willing to collaborate with him (Dartmouth and Harvard - two institutions with very little research and health care specialists).

Halvorson's book may not have as thick a list of citations as Porter's; however, it makes its point more concisely and much more effectively than Porter's.

In Porter's defense, since writing this book, he has become more knowledgeable about health care and his arguments are starting to make more sense. Redefining Healthcare proves the complexity of health care by demonstrating how difficult it is to apply basic theories of other industries to fix the health care system.

Halvorson's book along with R. Lawton Burn's The Business of Healthcare Innovation are the two most valuable books on the American health care system. You can read them both in half the time it will take you to read Redefining Healthcare and you will be twice as knowledgeable.

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.

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.

"Redefining Health Care" begins with data detailing the failures of America's "health system" - the highest and most rapidly rising costs among modern nations, combined with millions of uninsured, high error rates, and an average 17 years for the results of clinical trials to become standard clinical practice. Thus, the puzzle: "Why is competition failing in health care?"

Porter and Teisberg's answer is that it focuses far too much on cost-reduction, increasing negotiating power, providing broad-lines of service, and cost-shifting, and instead should focus on long-term value (results vs. costs) for patients. Key to accomplishing this is the collection of standardized patient outcome data (preferably risk-adjusted) that are used to identify providers needing improvement and sources from which that improvement can be gleaned, as well as in guiding patient decision-making.

"Redefining Health Care" also asserts that its recommendations are not just theories, but also supported by a number of cited examples.

This book provides a clear vision of how the U.S. can reduce health care costs while improving patient outcomes - without increased complexity. It should be read by legislators at both the state and national level, as well as by health care providers.