Learning Activity 1 - Value in Healthcare Introduction

Author: Jo ParrisPosted: 8 months 1 week ago

Task: Value in Healthcare Introduction

Time: 1 Hour

Prerequisites: None

Learning outcome: 'I understand Porter's theory of value in healthcare'

Remember to record this activity in your BPV Specialist learning activity log

* denotes optional background reading links

READING: The first task in this series of learning activities is to read Porter's seminal 2010 article in the New England Journal of Medicine, 'What is Value in Health Care' (including supplementary appendixes 1 and 2).

We can pick out some key concepts from this article:

1) 'Value' is defined as quality over costs

This is a core management accounting concept derived originally from manufacturing industry. By conceptualising this definition as a 'the value equation' we can see that there are two ways to improve value:

  • increase the numerator and improve quality without comprimising costs, or
  • decrease the denominator and reduce cost without comprimising quality.

If an activity doesn't improve value for the end user, then why would an organisation spend time, effort and money on it? This thinking provides an unifying goal for all parts of the organisation to work towards and incorporates ideas around efficiency and productivity.

2) 'Quality' is defined from the perspective of the end user

For manufacturing, the customer decides if the product is 'fit for purpose'. At Best Possible Value, we've expanded the top half of the value equation to include:

  • Clinical outcomes (does an improvement in health occur as a result of care?)
  • Patient experience (do they consider that care is fit for purpose and are services accessible?)
  • Safety (was harm avoided during the provision of care?)

The best way to know what our service users (patients and the public) care about is to ask them! Porter recommends using tools like 'Outcome Heirarchies' or 'Patient Reported Outcome Measures' (PROMs), for example.

3) The best way to cut costs is to improve quality

We often tackle improving value from the wrong angle and seek to cut costs without comprimising care outcomes. This can lead to falling foul of the 'efficiency paradox' which often leads to higher future costs (as noted in this 2014 article by Kaplan and Haas*).

Rather, if we focus on improving quality (from the perspective of the end user) we can not only ensure that the best care is on offer but also save money, particularly in the long term. (The Health Foundation published a good bit of evidence via the report, 'Does improving quality save money?'*. Spoler alert: yes).

You should now have an understanding of the foundations of Porter's theory of value in healthcare and appreciate the usefulness of the 'value equation'. We'll be expanding on this in several directions in future learning activities. For now, the final task is to examine the following case study of 'value-based reporting' in action:

READING: Value-based management and Reporting by King's College Hospital via the Health Foundation (plus bonus full report*)

I hope you've found this learning task useful. Please feel free to contact me with any feedback or post questions by replying to this thread.



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