Michael Porter and Elizabeth Olmsted Teisberg are experts in strategy and innovation, but, for better or for worse, they are relative newcomers to the health care arena. As a result, the language they use in Redefining Health Care often differs from the terms used by health policy analysts, even when their diagnoses and prescriptions are similar.
Porter and Teisberg’s basic theme — that we can cure many of the ills in health care if we encourage value-based competition — is a positive and timely message that is likely to be of widespread interest. This message, which Porter and Teisberg began to develop several years ago, is consistent with what many in the health care world are advocating and will resonate with some of the movements that are currently afoot, such as the drive for results-based payment, a.k.a. pay for performance.
However, I question one of the elements central to the way in which Porter and Teisberg would set up their value-based competition. The authors’ proposed units of competition are individual medical conditions; patients would be quoted a single price by each competing delivery network for the entire cycle of treatment for any given condition. While this would promote integration of care within each condition, it ignores a very important fact: Patients have a nasty habit of having more than one thing wrong with them. In Medicare, for example, patients with multiple chronic conditions account for a disproportionate share of spending, and patients with three chronic conditions see an average of 13 physicians annually. This creates a huge need for care coordination across conditions, which is why the IOM recently recommended not only that someone be designated to coordinate care for each patient, but that he or she be paid for doing so.
In addition, perhaps because they come from outside of health care, Porter and Teisberg gloss over some important issues that have proved to be very difficult in terms of politics, policy, or both. One example: Porter and Teisberg make an argument, which many will agree with, that it is hard to have a functioning competitive health care system if everyone is not involved in some way. The authors envision universal coverage achieved through some mechanism other than a government single-payer program — again, a concept that many in the health care world will find attractive.
Getting from “Here” to “There”
The difficulty arises in the cursory way that Porter and Teisberg discuss getting from “here” to “there.” They assert the need to subsidize low-income people and to somehow transition others into the new system, without very much detail about what that means. In fairness to Porter and Teisberg, they say early on that theirs is a book about delivery systems, not about insurance and financing, but it is unfortunate that they do not at least acknowledge the magnitude of the changes and challenges involved.
Moving to a comprehensive, all-in system is not impossible — indeed, some thoughtful politicians such as former Sen. John Breaux (D-LA) have put forth concrete and well-thought-out ideas for eliminating many of the separate “boxes” in our health care financing system. But anyone who has read Breaux’s work — which he discussed in a 2003 interview I conducted with him for Health Affairs — gets a sense of how difficult, on both political and policy grounds, such a transformation would be.
Similarly, Porter and Teisberg make a passing reference to every economist’s fondest dream — eliminating the tax exclusion for employer-provided health insurance. But they give little attention to the political difficulty of getting rid of the tax exclusion, or to the policy details of what would take its place.
Another area where Porter and Teisberg give short shrift to the complexities involved is their proposal — made by many before them — to establish a minimum coverage benefit. They talk as if one can grade interventions in binary fashion: either 1 for “works” or 0 for “doesn’t work.” But very little in health care is either 0 or 1 — it’s all about getting the information to determine what is likely to work for an individual patient, and it’s why benefit packages are frequently written in unhelpful language like “whatever is medically appropriate.”
Finally, Porter and Teisberg’s competition model requires performance measurements encompassing all of the clinicians and institutions that touch a patient during an episode of illness. These measurements go far beyond the siloed measures we now have for individual providers such as physicians and nursing homes, and the “moment in time” measures we have for discrete events such as physician office visits. Having just finished participating in a two-year IOM study on P4P, I can tell you that the challenges of putting in place such a comprehensive measurement system are more than formidable.
Porter and Teisberg pack a lot of detail into their book of over 400 pages, but on these and other issues — on the really hard stuff — the details are noticeably absent. It’s not that the authors need to solve all of these dilemmas; if they did, the selection committee for the Nobel economics prize could retire early. However, given Porter and Teisberg’s lack of background in health care, which has some advantages, I worry that they might not be aware of the immense barriers that stand in the way of achieving their vision of the health care system’s future.