The Stew BLOG

Higher-Value Care Necessary but Insufficient for Health Transformation

Bobby Milstein, Director, System Strategy | 09/06/2016

With the U.S. ranking the highest in healthcare costs in the world and last among 11 industrialized countries in many measures of quality*, health transformation leaders across the country are constantly trying to determine what role higher-value care—care that reflects both enhanced quality and lower costs—could play in a broader strategy to improve health.

Guided by the ReThink Health Dynamics Model, an evidence-based computer model that simulates a regional health system, ReThink Health has been exploring what combinations of interventions could do the most to improve health, reduce healthcare costs, and increase health equity. We have learned that investments in higher-value care are essential to improving health, but they must be made in concert with other interventions if they are to be successful.

Implemented on its own, higher-value care is expensive and vulnerable to reversal as resources diminish. When combined with payment reform and reinvestment of savings, though, our research suggests that higher-value care can be affordable, have lasting impacts, and unlock resources that can be devoted to addressing the root causes of health problems—paving the way toward health transformation.

In the August issue of Health Affairs, we reported the findings from a series of simulations that combine investments in higher-value care and population health with affordable long-term financial strategies. The simulations could reduce healthcare costs by as much as 14 percent and chronic illness by as much as 20 percent, and increase workforce productivity by approximately 9 percent by 2040. While the outputs of the model are not predictive, they present a credible projection based upon current trends and expected population changes.

As part of these interventions, we have defined seven essential components to higher-value care:

  • Coordinating care to reduce unnecessary referrals, tests, procedures, and inpatient admissions, and to limit use of technologies that are not cost-effective;
  • Establishing call centers where trained nurses advise callers about whether and where to seek medical care for acute issues;
  • Improving physician adherence to accepted care guidelines;
  • Improving self-care for disadvantaged patients;
  • Establishing patient-centered medical homes in primary care offices;
  • Redesigning primary care operations to increase capacity, especially for disadvantaged populations; and
  • Improving hospital post-discharge planning, with medication reconciliation and more referrals to home health care and rehabilitation facilities.

The investment in higher-value care is combined with funding through financial agreements that reduce incentives for costly care (shifting from fee-for-service to global payment) and reinvest a share of savings to ensure adequate long-term financing. In addition to sustaining higher-value care, funding is also re-invested in population health initiatives, including enabling healthy behaviors and increasing socio-economic opportunities (e.g., living wage laws, tax credits, childcare subsidies, and vouchers for housing). While each initiative on its own would contribute to improving health, it is the combination of investments that offers the greatest promise for transforming the health system.

Our research suggests that dramatic improvements in health system performance may be possible. Achieving regional health system transformation, however, is almost certain to require collaboration and commitment from stakeholders across all sectors of the health economy.

We encourage leaders of regional health systems to take on this challenge.

* SOURCES: The Commonwealth Fund, National Research Council, and Institute of Medicine


Additional authors of this blog post:

gary Gary Hirsch is a co-developer of the ReThink Health Dynamics Model.

Jack+closeup+11-08 Jack Homer is lead modeler for the ReThink Health Dynamics Model project.

fisher crop Elliot Fisher directs The Dartmouth Institute for Health Care Policy and Clinical Practice.

Bobby Milstein oversees the on-going development of the ReThink Health Dynamics Model.