American College Of Surgeons - Inspiring Quality: Highest Standards, Better Outcomes

Value guru Michael Porter urges surgeons to lead the transformation of health care

OCTOBER 24, 2018
Clinical Congress Daily Highlights, Wednesday First Edition

The transformation of our health care system to one based on value rather than services is finally under way, according to Michael Porter, MBA, Harvard Business School, Cambridge, MA, who coauthored the book Redefining Health Care: Creating Value-Based Competition on Results.

“You and your society can be leaders in this transformation, rather than be dragged along,” Porter told the assembled gathering Wednesday.

With costs still rising faster than gross domestic product (GDP), income, and wages in most developed countries, the health care system needs to be transformed, he said.

“Does that mean you will all have to take a 50 percent pay cut?” Porter asked. “I hope not. We need the best people to deliver health care.”

In the past, proposed solutions to the health care crisis have not bent the cost curve. Evidence-based medicine, safety, prior authorization, electronic medical records (EMRs), patients becoming better consumers because they have to bear more of the costs, IBM Watson’s artificial intelligence, lean process improvements, care coordinators, programs to address high cost areas, mergers and consolidation, personalized medicine—these efforts may have value, but they have not done the trick.

“We need to restructure health care, not make incremental improvements,” Porter said.

Our current system has too many goals, he said: good patient experience, safety, quality, access, research, and training, among others.

“We have found that if you lack an overarching goal, it’s hard to make progress.”

The fundamental goal and purpose of health care is to improve value for patients, Porter said. Our “true north” should be value, which he defines as the health outcomes that matter for the patient divided by the total cost of delivering those outcomes. Great outcomes delivered efficiently will bend the health care cost curve, he said.

“Delivering high value is the definition of success,” Porter said. “This is the only goal that unites all of the competing interests and provides a real solution.”

For patients with complex or highly specialized needs, it makes sense for the work to be concentrated among a few facilities rather than spread out among many, Porter said. In the virtuous cycle of value, volume matters – more patients with the same condition enables higher value.

Porter also argues that we need to measure and publicly report the outcome for every patient.

“For health care, the quality is the outcome,” he said.

Ultimately, the drive toward value-based health care will free up surgeons and other professionals from performing lower-level tasks – such as filling out EMRs – that distract them from higher-value tasks.

He said that surgeons specifically can create value by:

  • Thinking beyond the operating room: Move away from surgical silos and partner with caregivers in preventive care, perioperative care, rehabilitation, short-term follow up, and surveillance
  • Instituting universal outcome measurement and public reporting to drive improvement and demonstrate high-value care
  • Utilizing time-driven activity-based costing methodology covering the full cycle of care to demonstrate overall impact on efficiency and value
  • Actively engaging in bundled payments with employers, government payers, and private payers and advocate for broader implementation
  • ͏Reorganizing care within a region to optimize resources, aggregating volume by condition in fewer sites, performing lower acuity surgery in community hospital settings and higher acuity/complexity surgery in tertiary care hospitals

Ultimately, surgeons need to be, among other things, condition experts and not technicians, as well as team members and not solo actors, so they can ultimately deliver distinctive value rather than be commodity providers.

The health care transformation is already well underway, he said. Value-based thinking is restructuring care organization, outcome measurement, health system strategy, and payment models across multiple countries. Standardized outcome measurement and new costing practices are beginning to accelerate value improvement.

He believes that employers such as Walmart and others; suppliers, such as medical device and drug companies; and insurers can be the next accelerators for this transformation. In addition, government policy is beginning to reinforce value improvement, such as bundled payment models from the Centers for Medicare and Medicaid Services (CMS).

Surgeons should play a leading role in transformation of health care, he said: “I’d like to see you take us where we need to go.”

One surgeon attending the talk asked about the rapid consolidation among hospitals and private practices, and whether this value-based approach will mean fewer providers. Porter said he feels the consolidation movement has gone too far, and has been too much about building negotiating power rather than achieving efficiency.

“We need competition,” Porter said.

Demographic trends over the next 20 years, as well as coming scientific advances, ensure that there will not be too many doctors anytime soon. So, while he doesn’t expect doctors to have to take a pay cut, Porter said, he does expect that they will have to be more productive.

Another audience question concerned how bundled payments would be distributed among various providers. Porter said that each integrated xEW unit would decide how to divide up the payments – often starting with the going rate. They must also decide how to allocate any bonus received over the cost of care.

In response to another question, Porter emphasized the need to provide universal coverage: “The political wrangling is disappointing,” he said.

Porter concluded by saying that he hopes to come back to Clinical Congress in a few years to review the role the College and its members have had in transforming health care.

Additional information

The John J. Conley Ethics and Philosophy Lecture, Value-Based Health Care Delivery: The Strategic Agenda, was held Oct. 24 at the 2018 Clinical Congress of the American College of Surgeons in Boston. Program, webcast and audio information is available online at

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