Value-based Health Care

Jens Deerberg-Wittram, MD

BASEL, SEPTEMBER 20TH 2018

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In 1995, McArthur Wheeler robbed two banks after covering his face with lemon juice.

He believed, because lemon juice is usable as invisible ink, it would prevent his face from being recorded on surveillance cameras

But I wore the juice...!

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Dunning-Kruger effect: Incompetent but confident

Source: Unskilled and unaware of it: how difficulties in recognizing one's own incompetence lead to inflated self-assessments, Kruger, J., Dunning, D. (1999)

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1:60 mortality rate in base jumping

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Significant mortality differences in Swiss hospitals

61×

#64

12.3

4.3

#20

2.7

#1

0.2

6.7

#1

2.9

4.5×

#10

12.9

Pancreatic resection (cancerous lesion) Colorectal resection (cancerous lesions)

% mortality % mortality

• 53 hospitals perform procedure (15×)

• 30 hospitals perform less than 10 cases/yr

• 103 hospitals perform procedure (72×)

• 17 hospitals perform less than 10 cases/yr

9×

#5

3.6

2.0

#1

0.4

Open heart valve replacement Aortic aneurysm surgery

% mortality

• 22 hospitals perform procedure (232×)

• 3 hospitals perform less than 10 cases/yr

Source: BAG 2016, BCG analysis

8×

#30

66.7

47.8

#20

42.6

#1

8.0

% mortality

• 40 hospitals perform procedure (50×)

• 10 hospitals perform less than 10 cases/yr

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Average mortality rates of reporting Swiss Hospitals

Pancreatic

resection6.7%

5×

3×

Lungs/branchial

resection2.2%

Colorectal

resection4.2%

Base-Jumping 1.4%

Openheart valve

replacement2.0%

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Health care costs are rising at unsustainable rates

250

200

150

100

Income

HC Spend

GDP

20162010200520001995

HC expenditure 2016:

17.2% of GDP

HC expenditure 2016:

11.0% of GDP

100

300

200

Income

HC Spend

GDP

20162010200520001995

400

300

200

100

1995

Income

HC Spend

GDP

2016201020052000

300

200

100

Income

HC Spend1

GDP

20162010200520001995

HC expenditure 2016:

9.7% of GDP

HC expenditure 2016:

10.5% of GDP

HC expenditure 2016:

12.4% of GDP

400

300

200

100

HC Spend

GDP

201620102005

Income

20001995

1. Long-term care spending included in HC Spend in Sweden after 2011, thus HC spend for Sweden is indexed 1995–2010 and 2011-2016 with HC being same as GDP growth 2010-2011

Notes: Index 100 at 1995, based on local currencies; Income = Personal Disposable Income

Source: WHO; EIU; BCG analysis

HC expenditure 2016:

11.3% of GDP

400

300

200

100

2010

GDP

201620052000

HC Spend

Income

1995

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Switzerland outgrowing OECD in joint replacements

308

299

241

234

204

182

166

148

113

62

500 350300250200150100

OECD

UK

USA

Sweden

France

Germany

Switzerland

Israel

Spain

Canda

Per 100 000 population

240

226

206

178

160

149

126

124

120

55

250200150100500 300

Per 100 000 population

Israel

Spain

Sweden

OECD

UK

France

Canda

Germany

USA

Switzerland

Source: OECD report "Helath at a glance 2017", BCG analysis

Primary hip replacements (2016) Primary knee replacements (2016)

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Price differences in hip replacement surgery

0

30,000

20,000

10,000

12,467

ES

11,220

CH

10,224

BE

10,029

IT

9,605

NL

8,671

GE

7,570

SE

6,707

UK

6,054

FR

5,365

Cost of hip replacement surgery (€)

US

23,669

AU

8,383

Ø

+91%

Note: All reimbursement rates in EUR (PPP)Source: BCG Analysis, country specific DRG databases

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11

Switzerland – as much as many

other countries - is suffering

from serious quality and cost

issues in health care

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Value-based health care is the emerging paradigm

1. M. Porter: Redefining Health Care, 2006Source: "Redefining Healthcare", BCG analysis

ConceptInitial description

Health outcomes that

matter to patients

Cost of delivering

the outcomes

Central goal in health care becomes value for the patient,

not volume, cost containment or meeting single medical parameters

Value1 =

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Outcome measurement the first step towards value-based health care

Health system are optimized for

continuous improvement in value

delivered to each population segments

Standardization of outcome metrics

enables anonymous comparisons across

and within health systems

Individual organizations begin measuring

quality and reducing variation of patient

outcomes resulting from treatment/products

Phase IV

Phase II

Phase I

Phase III Public reporting creates incentives

(financial and non-financial) to improve

value

Characteristics of the phases

in the Transformation Roadmap

For each phase understand the meaning

for each dimension of the health care

system

Payments

Delivery organization

Informatics

Benchmarking

research & tools

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Individual organizations are measuring outcomes

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ICHOM defines global standards for outcomes that matter to patients

A physician-patient partnership ICHOM facilitates

a process with physician leaders and patient

representatives to develop

the Outcomes Minimum Standard Set

ICHOM is an independent not-for-profit organization,

main funding patients, payers, providers and governments

Source: ICHOM, the International Consortium for Health Outcomes Measurement

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Standardization of outcome metrics

Outcome hierarchy by Michael Porter

Tier 1

Health status

achieved or retained

Tier 2

Process of recovery

Tier 3

Sustainability of

health

Survival

Degree of health or recovery

Time to recovery & return to normal

activities

Disutility of care or treatment process

(e.g., complications)

Sustainability of health or recovery and

nature of recurrences

Long-term consequences of therapy

Source: M. Porter. What is value in health care? NEJM 2010

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INFLAMMATORY BOWEL

DISEASE

INFLAMMATORY BOWEL

DISEASE

Source: ICHOM

ICHOM has already developed 23 Standard Sets covering over 50 percent of the global disease burden

1. Bipolar disorder

2. End stage renal failure

3. Hypertension

4. Malaria

5. Adult population health

6. Substance use

7. Oral health

8. Inflammatory arthritis

9. Congenital hand malformations

10.Rotator cuff disease

11.Brain tumors

12.Upper GI cancers

13.Type 1 diabetes

14.Arrhythmia

Standard Sets

2012–2017

Ongoing discussions

to launch …

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Public reporting of outcomes across NHS England

Source: NHS Choices website

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Bundled payment for hip- and knee

surgery

• Payment of 56,300 SEK (~€6,300)

to cover full cycle of care,

including diagnostics, surgery with

post-operative care, implant and

follow-ups

Complication guarantee

• Provider financially responsible for

non-acute complications related

to the primary surgery up to 2

years post-operation

Result dependent payment

• 3.2% of the reimbursement was

retained and paid out if the

provider achieved defined goals

Financial incentives to improve value

Model design

Outc

om

es

Cost

s

Note: 2007-08 and 2009-10 were the 2 years before and after the new model was introduced.

Source: New reimbursement model for care choice hip- and knee prosthesis surgery – Follow up report; BCG analysis

0

2

4

6

8

3.9%5.0%

2y complications

4.9%6.0% -44%

-19%

-23%-18%

30d cardiov. event

Complication risk %

0.6%1.0%

2y implant revision

1.6%2.0%

2y re-op rate

2009-10

2007-08

0

30

60

90

120

Cost per patient (kSEK)

-20%

2009-10

66

2007-08

83

0

100

200

300 -17%

12 months

pre surgery

12 months

post surgery

2009-10

182220

2007-08

Days of sick leave

Costs and sick leave decreased with ~20%

Outcomes improved with more than 18%

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Integrate care delivery

between separate

facilities

Expand excellent

services geographically

Organize into integrated

practice units

Move to value-based

reimbursement models

Measure outcomes and

costs for every patient

1

2

3

4

5

6

Build an enabling IT platform

What Swiss providers should do in order to drive value?

Source: M. Porter, the strategy that will fix health care. HBR

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21

Soon, there will be a time that

our scholars and colleagues

will not be satisfied with

general comments on quality.

Instead they will call any

doctor a charlatan who is

unable to quantify his medical

outcomes.

Theodor Billroth, 1860