Porter's Value-Based Strategy for Health Care Reform

The New England Journal of Medicine has just published an article entitled "A Strategy for Health Care Reform — Toward a Value-Based System" by M.J. Porter - which has already attracted some international attention. (I learned of the publication as I read a communiqué from the Indian Association for Medical Informatics.) The principles of his approach to health care require critical review-especially as they are aligned with the U.S. health care industry for the promotion of competition as a driver of value, defined as health outcomes achieved per dollar spent. I am particularly concerned about the misuse of Dr. Porter's influence to pedal a U.S. model for health care reform where there exists no evidence in support of such a model.

According to Dr. Porter, while both universal health care insurance coverage and national system redesign are necessary to achieve "true reform", value takes precedence over universal coverage. It seems to me that he is confusing the concepts of universal access to services and universal health care insurance coverage. (In the U.S. system, the private health care insurance industry effectively denies access to millions of U.S. citizens - either by demanding prohibitive deductibles and co-payments or refusing to cover a particular claim for treatment.) Dr. Porter suggests that lower health care costs in other countries are due to universal insurance coverage, but this advantage too is unsustainable without improved value. He fails to recognize the single payer system design with publicly funded health information infrastructures as critical to controlling costs in other national systems. While certainly there has been "no convincing approach to changing the unsustainable trajectory" of the U.S. system, it is inaccurate to suggest that other countries such as Finland, far more advanced than the U.S. in design of an efficient national health care system, should reform their systems according to his recommendations. Rather, the U.S. should be learning from the examples set by other industrialized countries such as the UK, France and Taiwan as well as developing countries such as Cuba and Brazil.

According to Porter, there are six principles to guide health care system reform - all of which address financing:

1. Reform health insurance competition to focus on improvement in subscribers' health.
2. Motivate employers to stay in the system by penalizing "free riders". (The presence of employers in health care insurance markets will foster competition based on value.)
3. Address the unfair burden on those without access to employer-based coverage by equalizing tax deductibility of premiums paid by individuals independently or through their employers.
4. Create regional insurance pools (instead of a national pool) similar to the Massachusetts Health Insurance Connector. Regional pools apparently would be more effective in promoting value-based competition. Reinsurance programs are also critical to "spread risk" related to coverage of very expensive conditions.
5. Create income-based subsidies to assist low-income citizens in purchase of insurance.
6. Require all citizens to purchase health insurance.

This value-based delivery system requires "mutually reinforcing" steps to implementation. The most important features of such implementation appear to be outcome measurement, organization of care according to medical conditions with bundled payments for reimbursement of care, value-based competition for patients across geographical boundaries, adoption of HIT architectures and standards for electronic medical records, and patients' responsibility for their own health.
While many of these features seem painfully obvious, Porter offers no evidence in support of his claims that his framework will bring about the needed reforms in the U.S. system. The use of electronic medical records, for example, is assumed to bring about improved health care efficiency and quality by many researchers and policy-makers. Porter also asserts that "electronic medical records will facilitate both delivery restructuring and outcome measurement" without providing any qualitative or quantitative empirical support for this "bottom-up" change process. Porter's statement has not been demonstrated in any health care system. It would be just as reasonable to suggest that HIT infrastructures for health information exchange form a prerequisite for implementation of electronic health records. The existence of such national HIT infrastructures is certainly required to deliver the comprehensive program of outcome measurement at the foundation of Porter's strategy.
The framework does not mention the role of the public sector in health care system reform, except to affirm the superiority of the private sector to create accountability and value-based care through competition. (Again, there is no research evidence to support this claim. On the other hand, Amartya Sen has pointed out that national health care system performance is related to rate of public health investment. See Sudhir Anand and Martin Ravallion, Human development in poor countries: on the role of private incomes and public services, Journal of Economic Perspectives, 1993, 7: 133-150.)
Porter suggests that his reform strategy requires new independent institutional roles to oversee outcome measurement, set HIT standards, and regulate bundled reimbursement; and that Medicare might be able to "take the lead in some areas." (These new roles should probably be assumed by state or federal entities to assure their independence. Controversies surrounding the Certification Commission for Healthcare Information Technology (CCHIT) illustrate this dilemma.) The Commonwealth Fund has published a comparison of public investment per capita in HIT (2005) (slide #72) showing that the U.S. lags far behind the U.K., Canada, Germany and Australia. This lag probably reflects the lack of public infrastructure to support EHRs and health information exchange at the regional or national levels.
Aside from a significant pro-business ideological bias, Porter's strategy lacks clarity in the definition of "value" as "the health outcomes achieved per dollar spent." Although in the past he has emphasized the role of physicians in health care reform, his perspective has shifted to the system level of analysis. However, value is consistently defined at the individual rather than the population level. In my opinion this conceptual definition is impossible to operationalize for measurement as prescribed - primarily because "value" is to be measured at the individual treatment level of analysis, while the relevant outcome may occur in the aggregate - at the family, community, or population level.
"Value" is a highly subjective dimension at the individual as well as the collective level. How can consensus be developed to prescribe the definition of "value" for such a comprehensive program of outcome measures? Criteria for patient, doctor and provider choices are also very subjective. Objective characteristics of health care delivery would be more useful to inform subjective patient choices. (Porter has not addressed the immense costs associated with production of his outcome measures, including the conduct of extensive comparative effectiveness research programs required to serve as an evidence base.)
The definition of value related to "bundled" services poses substantial methodological problems. Bundled services and reimbursement schemes assume a level of standardization not consistent with the complexity of individual cases - including comorbidity. This design feature would also encumber the dynamics of market competition. (Certain provider organizations would integrate their services in competing industry clusters.) In any event, there is no research to substantiate Porter's far-reaching claims on the benefits of health care services bundled according to medical condition. A CMS (Medicare and Medicaid) initiative to introduce bundled reimbursement in the mid-1990s failed due to provider resistence. The reasons for this failure should be examined to ensure the validity of new proposals in the current environment.
Porter also needs to clarify how the dynamics of consolidation and competition co-evolve in health care services markets. While he deplores "hyperfragmentation and duplication of services", such duplication of services is implicit in the competitive environment he advocates. Certainly the regional structuring of risk pooling would create boundaries to competition and structural redundancy across regions. I do not understand why Porter considers that regional organization "will result in greater accountability to subscribers and closer interaction with regional provider networks, fostering value-based competition." The case of McAllen, Texas and Doctors Hospital illustrates the possible dysfunction of such a model at the local level of analysis-including the exorbitant costs in public CMS reimbursement. (Hear an interview with Dr. A. Gawande on NPR.) Some dimensions of health care in the future will remain anchored in geographic proximity, but others will be more efficiently organized at the national level. Not only will HIT contribute to efficiencies redefined at the national level, but patients will probably be more mobile in pursuit of both work and health care services.
My review has suggested only a few of the many questions to be answered concerning Porter's strategy for health care reform. As many American authors on policy for U.S. health care reform, he needs to consider other national health care systems to identify an evidence base relevant to the American challenge. He refers only to his own publications, and mentions the case of Finland not as an example for study, but as an illustration of the universal crisis in controlling health care costs. One very instructive country case is Taiwan where single payer system reform was implemented in 1995 after thoughtful examination of other national systems to identify desirable features transferable to the Taiwanese context. U.S. policy-makers would have much to learn from this change strategy.
I would like to conclude this review by deploring the excessive emphasis on finance to the exclusion of any reference to medical ethics in the debate on U.S. health care system reform. While financial incentives are certainly important, especially from a business standpoint, physicians and health care professionals should not require micro-management through financial rewards to motivate their service. Implementation of such complex reward systems is very expensive as well as vulnerable to fraud and legal challenge. The most important incentives should be the intrinsic rewards associated with the privilege of offering a public good through health care service.