Part 3: The Baselines and Basics of Value-based Healthcare


Chronic disease is something that, you know, by definition is chronic. Someone doesn’t get cured. They have that for life. What the healthcare system tries to do when faced with a patient with a chronic condition is that you try to prevent escalation. You try to ensure that that condition doesn’t get worse, and to do that you develop a care pathway, a care regimen, that depends on the specifics of the condition of that patient. Not only what disease they have but what stage in that disease they are. The treatment of a stage four heart failure, congestive heart failure patient versus a stage one is quite different. They both of heart failure but the treatment methodology that you’ll apply to them is different. Not only that the way you measure how well they’re doing is through a series of measures which we’d call outcome measures. That are done over some periods of time. The periodicity of those measurements, the nature of those measurements, the expected result of those measurements all vary depending on the condition of the patient to start with, that baselining. And I think you can appreciate that. You can only do this if you identify an appropriate cohort. Which is narrow enough to have a unique care pathway. Unique set of expected outcome measures but be big enough that it has some statistical basis. Enough numbers to give you some statistics to adhere to a common care pathway is what we start with. In value-based healthcare and certainly in chronic disease management. Chronic disease management is about preventing escalations, it’s about categorizing the status of a patient, it’s about defining the expected outcomes. What you measure when you measure. And if you do those things successfully and make adjustments, that’s the whole object of chronic disease management. And you can develop value-based healthcare with payment methods that are some sort of expected payment depending on the cohort that you’re talking about. And outcome measures that determine how much you should be paid or whether you get a bonus or a penalty depending on how well you’re doing. That would be a value-based system where you’re accountable for the disease itself. Now what happens if there’s an escalation of that condition, which can happen for a variety of reasons. There’s a whole set of actions that one takes during an escalation. The immediate action is to take some measures to cure it in the least invasive way possible. But often you’ll get to a situation where an intervention is required. Where the acuity level of that patient, for a period of time, is actually increased because they have to go through some sort of surgery. And then after cured they’re put back into chronic care management. Now this acute care episode has its own outcomes, has its own measurements, has its own risk stratification. So a patient comes in say requires cardiac surgery. You know a risk stratification will include the age of the patient, the weight of the patient, whether they’ve got diabetes, whether you know a whole bunch of other things that one would ask. Including things like lifestyle, including things like socioeconomic status. Based on that a care pathway will be designed. One of the care pathways could be you’re not ready for the surgery yet. You’ve got to get your diabetes under control or you have to do something else and then we’ll do the surgery. And everything I’m saying here today is not something that physicians don’t do. I think they do it today. It’s just not standardized. And there aren’t standard tool sets they can follow, in a systematic way. And so the variability is very high, and there’s no measurement of success. You don’t have tools and you don’t have measurements, even with the best of intentions, your efforts are never going to be as good as compared to if you actually do measurements and are rigorous about it. The other point that I want to make about acute care episodes is that the outcome measures for an acute care episode is different from the types of outcome measures that you have for chronic disease monitoring. Here you really focused in the process of recovery from the acute care episode. This is about recovery without complications. This is about lack of infection. This is about meeting the goal of the interventional procedure by itself. Once you’ve recovered and reach the goals that the intervention was aimed, at then that patient goes back into the chronic care management cycle. And you know care is managed. So chronic care management and acute care are actually linked in this way. In practice, to attack this problem the dollars are bigger in acute care. And it may be important to attack that first. But you cannot ignore chronic care as well at the same time. Because if you do, if you have pour chronic care management, you’ll get an escalation, you do an outstanding job of the acute care episode. Do it very well very quickly the right levels of efficiency you get paid for it. You send them back to a poorly managed chronic care system. They’ll come back again and not only will you get the overutilization, you’re really not taking care of the health properly. And there’s inefficiencies there to. So there is no outcome measures in either branch, it may be a good idea to start with the acute care because that’s where a lot of expenses. And maybe the intensive chronic care where you’ll get big results very quickly. We as a company and medical technology companies, and there’s a whole industry around this, where there’s a lot of effort that goes into optimizing therapy specifically. Benefit of that therapy can only be realized if you look at the entire context of the episode. So we can do all we want, but there’s no post acute care. Or you pick the wrong patients you know you will not get the desired result of all that money that you spend and we spent. Although therapy optimization is important, it needs to be put in the context of the overall health care system for the true value of that optimization process to be realized. Here’s a proposal that we have that kind of summarizes a lot of things that I talked about. First, the three categories of therapy optimization, episodic care, and chronic care management. It’s important to think of them separately and at least when we discuss, it’s important to have that perspective. What are we talking about. Optimization, an acute care bundle, chronic care management. Now, within that there’s some themes that I’ve already talked about. Themes that are common to all three categories of care. The theme of picking a disease or a condition. It could be a co-morbid, sort of many diseases. But that’s still a condition, so pick a disease or a condition. Then you pick a cohort within that disease or condition you’re risk stratifying. A disease could be diabetes, a cohort could be pediatric type one. And you’ve got to get to that level of precision, because the next step is to define a care pathway. And I’ll argue that if you pick diabetes there’s no common care pathway for all patients with diabetes. Clearly not. In fact there’s not even a common care pathway between all Type 1 diabetes patients. There’s pediatric patients, there’s adult patients. Who both have Type 1. They’re infants, they’re adolescents. And I’ll argue and I think you’ll understand, that the care, the nature of the care that you provide to a five year old who’s got Type 1 diabetes versus a 20 year old who’s got Type 1 diabetes versus a fifty-year old whose got Type 1 diabetes, the way in which you talk to them, the problems that they encounter in managing their diabetes are different. It has to be done rigorously and systematically and care pathways have to be aligned to that cohort. Once you’ve defined a care pathway by definition, you’ve got an expected outcome. Because why are you doing the things you’re doing, you’re doing it for a reason. And that reason is expected outcome. And the outcome needs to be defined in quantitative ways which I’ll talk to in a minute. Only once you’ve defined the outcome and the time horizon over which that outcome is measured. Whether it’s periodic or whether it’s a one-time, if it’s an acute care episode. Then only at that point can you baseline a certain system and baseline a certain cost. And I bring cost up at the end because cost without outcome is meaningless. A cost target that reduces costs without defining what you’re trying to achieve with that money that you’re spending, is not a worthwhile conversation. Because you can always reduce costs by not doing anything. The outcomes will get worse but you will reduce costs. And then that’s never the intention, the intention is to spend the money to reach a certain level of care. The risk stratification is to happen to understand what you’re trying to achieve, the level of outcome you’re trying to achieve, and the cost to achieve that. These have to go together. Equally you may say we don’t, our costs for GDP or whatever for health care less. Well, what outcome have you provided? And how do you reach those outcomes? And it’s not just gross outcomes like the lifespan of a nation. It’s going to be more granular than that. So this discipline, cohort identification, care pathway assignment, outcome definition, cost measurement, are the basics of value-based healthcare. You cannot have a discussion of improvement until you defined this basic work.

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