We live in a time of great change in the health care marketplace. From the Affordable Care Act to changes in payment to an increased drive for price transparency, multiple forces are conspiring to reshape the market landscape beneath our feet. Yet, for their many divergent aspects, all of these forces have one thing in common: the drive for value. In the days ahead, it will become imperative for all health care providers to articulate the exact nature of the value they bring to the table, and to develop approaches that consistently align with that value proposition.
There isn't a one-size-fits-all approach to defining value in health care. This is because organizations bring different value propositions to unique customer segments. They operate in a variety of markets that can have a wide range of expectations for the provider. Take, for example, rural hospitals and academic health centers. The customers at a rural hospital are looking for emergency care and basic treatment. An academic medical center, in contrast, is expected to provide leading-edge research and innovation. Both of these provider types can seek to define and enhance the value that they provide, but they probably will need to focus on different services.
Providers seeking to thrive in today's health care market must begin by defining their value proposition. In an age of increased transparency, consumers and purchasers will be asking, "Why are you the best hospital for me?" Providers will need to be ready to quantify the advantages of the care they provide.
Make no mistake; I'm proposing a change to the status quo. The drive for value is creating a fundamental reorientation of the health care system around quality and cost-effectiveness. Players in the market increasingly expect to know the value of the care that is being purchased.
Despite these varied definitions of value, we still must be able to quantify excellence in a value-based system. I think that value will be quantifiable when we look at some new indicators of business success for providers.
• Have you been able to maintain or improve performance on quality metrics while achieving demonstrable savings in the cost of care?
• Have you been able to persuade payers and purchasers that the care your organization provides is of high value (achieving, for example, preferred provider status in an insurer's network)?
• Have you been able to create value for the health care purchaser while sustaining the financial health of your organization?
If you can answer "Yes" to these and similar questions, then I believe you are well on the path to success in a value-driven, competitive marketplace.
The Healthcare Financial Management Association's Value Project research has been devoted to helping providers develop the capabilities they need to adapt to the new payment environment and define their value proposition. Through the project's ongoing research, we are working with providers of all sizes and types — serving all manner of markets — to help them actively foster the change within their organizations that will be necessary to thrive in the coming marketplace. Consumers increasingly are seeking out providers that offer a strong value proposition and follow through with [high]-quality, cost-effective care. To keep pace with these demands, providers must define their value propositions and drive their organizations to achieve that value.
Joseph Fifer is president and CEO of the Healthcare Financial Management Association in Westchester, Ill.