• Industry: Healthcare
  • Type: Survey report
  • Date: 4/16/2013

Higher value can only be realized by moving care upstream 

While it may now seem like a given, it has only been in the last decade that health organizations have recognized better care – more effective, safer, more patient-centered – is usually less expensive care.1 Indeed, by preventing disease and the complications that often accompany chronic illness or unnecessary or avoidable care, we can improve the quality of life for patients and reduce the cost for payers.

Put simply, care must be moved upstream, shifting the model from one where health systems prefer to wait for conditions to become acute (and then take care of patients in high-cost medical centers) to one where the focus is on preventing these conditions from becoming acute in the first place. This includes treating patients proactively in their own environment. One aim of the health system should be to mobilize, activate and support a patient’s self management in his or her own home so that he or she does not have to be admitted to an acute hospital center or nursing home, which, more often than not, triggers further deterioration of the patient’s condition.

Delivery must be integrated and coordinated

When viewed within the context of many of our current, highly fragmented care ecologies, the transition towards value seems practically impossible, leading payers and providers to come to the conclusion that care must be delivered in a much more integrated and coordinated way.

“We need to move towards population based care, following the patient. The hospital is just a very small part of the continuum of care most patients need. Organizing our care around the hospital turns the whole focus upside down,” said Sir Ian Carruthers, Chief Executive, National Health Service, South of England .

Achieving this level of integration will require wholesale change that moves systems from a provider led organization of care towards a patient-led system of care. This, in turn, implies that the efforts of primary care professionals (GPs, home care, community nurses, and physiotherapists) should be coordinated with those of the medical specialists so that they work not just together, but also with the patient, as a single team focused on a common goal.

Case Study

Chris Rex, CEO of Ramsay Health Care in Australia , articulates why some payment reform programs have not met their objectives.

He tells the story of a facility in his hospital chain which, for many years, had run a successful inpatient mental health facility within a certain region. But when policy makers introduced a new capitated payment model for integrated mental healthcare, the situation rapidly changed.

As the only inpatient provider in the region, the facility’s staff started to create programs aimed at moving patients outwards into community care, reducing inpatient admissions and the overall length of stay. This, in turn, improved revenues on a per capita basis, since outpatient care was less costly than inpatient care.

However, Mr. Rex points out that: “The program was successful in that it moved an amount of care from the inpatient setting to the community but with an associated adverse outcome for the inpatient facility.” This is because as care moved upstream, net income for the facility declined.

And while this was clearly the desired outcome from the policy maker’s perspective, it did little to encourage investment and transformation from those providers whose core business model was running inpatient facilities.

Back to top

There is ample evidence to show that by organizing care in this way, health systems and payers can both improve quality and reduce costs. But, to date, all signs point to the fact that most healthcare systems are still far from enacting the changes that will ultimately help them realize these benefits.

In our experience, organizations that are able to make improvements in the following areas should start to experience major benefits in terms of both health expenditure and outcomes:

  • More proactive care for the elderly and people with chronic conditions, including state-of-the-art acute care for patients who have suffered from strokes, heart attacks, traumas or other acute events
  • High-level elective care that pays significantly more attention to a patients’ preference for non-surgical alternatives2
  • Top-level care for cancer (from prevention and early detection through to evidence-based treatment)
  • Integrated and personal maternity care that is not overly-interventionist

While the evidence in support of this transition may be clear, actually delivering it is more easily said than done. Indeed, the current state of affairs within most health systems seems to show that while these insights are not new, actual progress has been slow. Yet there is one tool in the payers’ hands that could quickly catalyze change and create the necessary conditions for change to occur – that tool is payment reform.

1 Dr John Øvretveit: Does improving quality save money? The Health Foundation, 2009.
2 Mulley et al. 2012.


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