SAN FRANCISCO — When Michael Porter began his keynote session Thursday at the Health Forum–American Hospital Association Leadership Summit, outlining six steps health care needed to take to become value-focused, much of the list looked mighty familiar.
The use of bundled payments, integrated delivery systems and information technology are well-known components of the transformation taking place in health care, at least in hospital circles.
But as the Harvard Business School professor and management guru laid out his case, a few things stood out as perhaps not getting the attention that they should.
For one, Porter hammered repeatedly on the concept of hospitals' getting to know their costs as a prelude to the proper bundling of care and reworking of care departments around conditions. That doesn't just mean knowing what the chargemaster says. Instead, activity-based costing is the solution, something some hospitals and health systems are already doing. The University of Pittsburgh Medical Center is one such system that has created and implemented activity-based cost accounting.
Without that information, truly efficient bundled payments cannot be constructed, so this is not something that can be avoided forever given the momentum behind the use of bundled payments, Porter argued.
Another topic that stood out is the idea of transforming hospitals in a health system into specialist facilities to a degree, which would boost volume, reduce costs and improve quality. The current approach, in which "everybody's trying to do a little bit of everything," needs to be adapted to allow for more specialization. The benefits of better outcomes and reduced cost would be significant. "This is a very big deal," Porter said.
Figuring out what service lines should be offered where would not be a simple process, but it is workable from a patient consumer perspective, according to Sanjay Saxena, M.D., partner and managing director for Boston Consulting Group, who co-presented on research regarding consumer preferences.
"Everybody thinks patients want care close to home, that they won't travel, and that's true for basic primary care services," Saxena said, when I asked him about it at the summit. "But in general, patients are very happy to drive for specialty services at centers of excellence," he said.
An example of a situation that could be improved would be one in which a system runs three different heart centers in separate hospitals, when one would do, out of fear that they will lose patients who won't travel farther for specialized care.
But they will come, he said, if given financial incentives.
The increasing demands on hospitals amid health care's transformation may sound daunting, but Porter says he's optimistic. "Based on what I've seen, I know with 100 percent certainty that you can do it," he told attendees.