“How can I know whether a new statin is a better value for the money than the statins already on the market?”
“Are we exerting too much effort (and paying too much) to accrue patients for our clinical trials?”
“Our lab could be more valuable to the community if we could add more services to more patients without adding to our cost. Can we do that?"
Welcome back to TeloChain’s Real-World Healthcare Insights! This is the second episode in a series on how secure technology-enabled process transformation and strategy redesign can help you harvest the full value of healthcare services.
Cut to the punchline: Maximizing the value (outcomes per dollar) of healthcare depends on how well (appropriately, accurately, and efficiently) it is delivered—i.e. on operations. Knowing how to maximize value for a process, service or product depends on clearly understanding its value proposition, story and metrics, and most efficiently getting the desired results.
Mind the gap!
In our first episode, we said that any healthcare ‘intervention’ (such as ordering a test, prescribing a medication or running a clinical trial) has an intended (potential) value, but harvesting that value depends on the set of factors required to actually deliver the care.
In the real world, there’s usually a gap between the potential and actual value. Now we take a closer look at value in healthcare, and in Episodes 3, 4 and 5 we’ll illustrate three big reasons for the gap: inefficient process design, insufficiently robust strategy, and failures of security.
How does healthcare produce value, and how is that value measured?
Think of the gap between potential and actual value as leaving money on the table. To know whether, and how much, value you’re leaving on the table, you have to know what leaving no money on the table looks like.
Understanding the full value of a healthcare service helps us discover the essential role of operations in how well that intended value is delivered in the real world (that is, how large is the gap). Operations as a category encompasses all that must work together smoothly and efficiently to deliver care: the people, roles, data, tasks, documents, handoffs, workflows, metrics, and reporting. An operations platform is the technology, processes, and set of rules that support operations.
Value = outcomes (or results), divided by the cost of producing those outcomes. (2) So, the better the operations platform enables the actual provision of healthcare, the more potential value can be realized.
A healthcare value example: improving glycemic (blood sugar) control in type 2 diabetes, as measured by HbA1C:
For example, suppose the weighted-average one-year cost of a clinical event that can be potentially prevented by adherence to oral hypoglycemic medication is $20,000 (5). If good adherence to the drug prevents one such event per 100 people over one year, then (in this simplified example) one year of good adherence saves $20,000 for the group of 100. If the cost of a year of drug at 80% adherence is $400 ($40,000 for the group), then the cost to prevent 1 event for one year = $20,000. (6)
Is this a good value for the money? Is it worth paying $20,000 for a year to prevent one heart attack, stroke or heart failure in a high risk group of 100 diabetics? This is hard to answer in healthcare because of the many factors that must be taken into account—far beyond our scope. But remember the value ($20,000 per prevented heart attack per year per 100 similar patients) can only be achieved if each of those 100 people is at least 80% adherent, which is difficult outside the walled garden of a clinical trial. So if we decide to go for the value, let’s also make sure we set ourselves up to harvest as much of it as possible—a problem that can be addressed operationally.
Here, we are specifying operations as the content, management, and monitoring of tasks (the actions of people and machines) and processes (task handoffs and workflows governed by a set of rules) designed to achieve specified objectives.
So we have the potential value of healthcare, which is variably realized through operations. In the example, the potential value is $20,000 per prevented clinical event in 100 patients who are at least 80% adherent. If they’re less adherent, it will cost more than $20,000 to prevent one event. Suppose what actually happens after one year is that because of poor drug adherence, it costs $40,000 to prevent one event--a $20,000 value gap. That’s $20,000 of potential value left on the table. (8) (9)
Here are some examples of healthcare-related objectives, associated healthcare tasks (at a very high level), and supporting operations. Each of the high-level operations categories include numerous roles, tasks, documents, and workflows. Without operations, healthcare would be indeed hobbled.
Value from what perspective? Is that heavy musty box of photos more valuable to you than to your partner (who may be tired of moving it to another house...for the fourth time)? Patients, clinicians, clinic and hospital administrators, and payers may value the same healthcare service differently and that figures into how they make decisions among competing treatments or uses of resources. A recent University of Utah Health study illustrates the range of value assessments and rankings based on role, reminding us of the value of seeing the world from others’ perspective every once in awhile. (7)
Up next: Where are process vulnerabilities costing you healthcare value? A use case.
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