Please use this as an example for outline. Please write an executive summary and use in text citations and references below. other references should be less the five years old. Case: Pfizer and the Challenges of the Pharmaceutical Industry for the class Global healthcare leadership. Focus on Global healthcare leadership. Requirements: Case Study | 2 pages, Single spaced se outline example below: Executive Summary Thesis: Therefore, this executive summary analyzes Walsh leadership through the lens of global healthcare leadership. Thus, the paper will examine different concepts ranging from four P’s, pricing, supply, brand dilution, reputational risk, quality, value and market position and supply and demand. undefined Global strategy Supply and demand undefined ii.4ps undefined iii.Brand dilution undefined iv.Reputational risk undefined v.Quality undefined vi.Value undefined vii.Market position 5 attachments Slide 1 of 5 attachment_1 attachment_1 attachment_2 attachment_2 attachment_3 attachment_3 attachment_4 attachment_4 attachment_5 attachment_5 The Big Idea TH E STRATEGY THAT WILL FIX HEALTH CARE 50 Harvard Business Revievi/ October 2013 HBR.ORG Michael E. Porter is the Bishop Lawrence University Professor at Harvard University. He is based at Harvard Business School. Thomas H. Lee is the chief medical officer at Press Ganey and the former network president of Partners Healthcare. PROVIDERS MUST LEAD THE WAY IN MAKING VALUE THE OVERARCHING GOAL BY MIOHAEL E. PORTER AND THOMAS H. LEE I n health care, the days of business as usual are over. Around the world, every health care system is struggling with rising costs and uneven quality despite the hard work of well-intentioned, welltrained clinicians. Health care leaders and policy makers have tried countless incrementalfixes—attackingfraud, reducing errors, enforcing practice guide1 lines, making patients better “consumers,” implementing electronic medical records—but none have had much impact. It’s time for a fundamentally new strategy. At its core is maximizing value for patients: that is, achieving the best outcomes at the lowest cost. We must move away from a supply-driven health care system organized around what physicians do and toward a patient-centered system organized around what patients need. We must shift the focus from the volume and profitability of services provided— physician visits, hospitalizations, procedures, and tests—to the patient outcomes achieved. And we must replace today’s fragmented system, in which every local provider offers a full range of services, with a system in which services for particular medical conditions are concentrated in health-delivery organizations and in the right locations to deliver high-value care. Making this transformation is not a single step but an overarching strategy. We call it the “value agenda.” It v«ll require restructuring how health care delivery is organized, measured, and reimbursed. In 2006, Michael Porter and Elizabeth Teisberg introduced the value agenda in their book Redefining Health Care. Since then, through our research and the work of thousands of health care leaders and academic researchers around the world, the tools to implement the agenda have been developed, and their deployment by providers and other organizations is rapidly spreading. The transformation to value-based health care is well under way. Some organizations are still at the stage of pilots and initiatives in individual practice areas. Other organizations, such as the Cleveland October 2013 Harvard Business Review 51 THE BIG IDEA THE STRATEGY THAT WILL FIX HEALTH CARE Clinic and Germany’s Schön Klinik, have undertaken large-scale changes involving multiple components ofthe value agenda. The result has been striking improvements in outcomes and efficiency, and growth in market share. There is no longer any doubt about how to increase the value of care. The question is, which organizations will lead the way and how quickly can others follow? The challenge of becoming a value-based organization should not be underestimated, given the entrenched interests and practices of many decades. This transformation must come from within. Only physicians and provider organizations can put in place the set of interdependent steps needed to improve value, because ultimately value is determined by how medicine is practiced. Yet every other stakeholder in the health care system has a role to play. Patients, health plans, employers, and suppliers can hasten the transformation—and all will benefit greatly from doing so. The Value Agenda The strategic agenda for moving to a high-value health care delivery system has six components. They are interdependent and mutually reinforcing. Progress will be greatest if multiple components are advanced togethe ORGANIZE INTO INTEGRATED PRACTICE UNI (IPUs) EXPAND EXCELLENT ICES ACROSS GEOGRAPHY INTEGRATE CARE DELIVERY ACROSS SEPARATE FACILITIES MEASURE OUTCOMES AND COSTS FOR EVERY PATIENT MOVE TO BUNDLED PAYMENTS FOR CARE CYCLES BUILD AN ENABLING INFORMATION TECHNOLOGY PLATFORM 52 Harvard Business Review October 2013 Defining the Goal Thefirststep in solving any problem is to define the proper goal. EfForts to reform health care have been hobbled by lack of clarity about the goal, or even by the pursuit of the wrong goal. Narrow goals such as improving access to care, containing costs, and boosting profits have been a distraction. Access to poor care is not the objective, nor is reducing cost at the expense of quality. Increasing profits is today misaligned with the interests of patients, because profits depend on increasing the volume of services, not delivering good results. In health care, the overarching goal for providers, as well as for every other stakeholder, must be improving value for patients, where value is defined as the health outcomes achieved that matter to patients relative to the cost of achieving those outcomes. Improving value requires either improving one or more outcomes without raising costs or lowering costs without compromising outcomes, or both. Failure to improve value means, well, failure. Embracing the goal of value at the senior management and board levels is essential, because the value agenda requires a fundamental departure from the past. While health care organizations have never been against improving outcomes, their central focus has been on growing volumes and maintaining margins. Despite noble mission statements, the real work of improving value is left undone. Legacy delivery approaches and payment structures, which have remained largely unchanged for decades, have reinforced the problem and produced a system with erratic qucility and unsustainable costs. All this is now changing. Facing severe pressure to contain costs, payors are aggressively reducing reimbursements andfinallymoving away from feefor-service and toward performance-based reimbursement. In the U.S., an increasing percentage of patients are being covered by Medicare and Medicaid, which reimburse at a fraction of private-plan levels. These pressures are leading more independent hospitals to join health systems and more physicians to move out of private practice and become salaried employees of hospitals. (For more, see the sidebar “Why Change Now?”) The transition will be neither linear nor swift, and we are entering a prolonged period during which providers will work under multiple payment models with varying exposure to risk. In this environment, providers need a strategy that transcends traditional cost reduction and responds to new payment models. If providers can HBR.ORG THE PROBLEM Health care worldwide is struggling with rising costs and unsatisfactory quality. No “silver bullet” approaches or incremental fixes address those problems. Without a true solution, physicians will face lower incomes, patients will pay more, and services will be restricted. THE APPROACH A MODEL FOR CHANGE Ifwe can agree on the overarching goal of value for health care systems—improving outcomes that matter to patients relative to the cost of achieving those outcomesthen we can begin to make progress. The strategic agenda for moving to a highvalue health care delivery system comprises six interdependent components: organizing around patients’ medical condition rather than physicians’ medical specialty, measuring costs and outcomes for each patient, developing bundled prices for the full care cycle, integrating care across separate facilities, expanding geographic reach, and building an enabling IT platform. improve patient outcomes, they can sustain or grow their market share. If they can improve the efficiency of providing excellent care, they will enter any contracting discussion from a position of strength. Those providers that increase value will be the most competitive. Organizations that fan to improve value, no matter how prestigious and powerful they seem today, are likely to encounter growing pressure. Similarly, health insurers that are slow to embrace and support the value agenda—by failing, for example, to favor high-value providers—will lose subscribers to those that do. The Strategy for Value Transformation The strategic agenda for moving to a high-value health care delivery system has six components. They are interdependent and mutually reinforcing; as we will see, progress will be easiest and fastest if they are advanced together. (See the exhibit “The Value Agenda.”) The current structure of health care delivery has been sustained for decades because it has rested on its own set of mutually reinforcing elements: organization by specialty with independent privatepractice physicians; measurement of “quality” defined as process compliance; cost accounting driven not by costs but by charges; fee-for-service payments by specialty with rampant cross-subsidies; delivery systems with duplicative service lines and little integration; fragmentation of patient populations such that most providers do not have critical masses of patients with a given medical condition; siloed IT systems around medical specialties; and others. This interlocking structure explains why the current system has been so resistant to change, why incremental steps have had little impact (see the sidebar “No Magic Bullets”), and why simultaneous progress on multiple components of the strategic agenda is so beneficial. The components ofthe strategic agenda are not theoretical or radical. All are already being implemented to varying degrees in organizations ranging from leading academic medical centers to community safety-net hospitals. No organization, however, has yet put in place the full value agenda across its entire practice. Every organization has room for improvement in value for patients—and always will. Organize into Integrated Practice Units (IPUs) At the core of the value transformation is changing the way clinicians are organized to deliver care. The first principle in structuring any organization or business is to organize around the customer and the need. In health care, that requires a shift from today’s siloed organization by specialty department and discrete service to organizing around the patient’s medical condition. We call such a structure an integrated practice unit. In an IPU, a dedicated team made up of both clinical and nonclinical personnel provides the full care cycle for the patient’s condition. IPUs treat not only a disease but also the related conditions, complications, and circumstances that commonly occur along with it—such as kidney and eye disorders for patients with diabetes, or palliative care for those with metastatic cancer. IPUs not only provide treatment but also assume responsibility for engaging patients and their families in care—for instance, by providing education and counseling, encouraging adherence to treatment and prevention protocols, and supporting needed behavioral changes such as smoking cessation or weight loss. In an IPU, personnel work together regularly as a team toward a common goal: maximizing the patient’s overall outcomes as efficiently as possible. They are expert in the condition, know and trust one October 2013 Harvard Business Review 53 THE BIG IDEA THE STRATEGY THAT WILL FiX HEALTH CARE another, and coordinate easily to minimize wasted time and resources. They meet frequently, formally and informally, and review data on their own performance. Armed with those data, they work to improve care—by establishing new protocols and devising better or more efficient ways to engage patients, including group visits and virtual interactions. Ideally, IPU members are co-located, to facilitate communication, collaboration, and efficiency for patients, but they work as a team even if they’re based at different locations. (See the sidebar “What Is an Integrated Practice Unit?”) Take, for example, care for patients with low back pain—one ofthe most common and expensive causes of disability. In the prevailing approach, patients receive portions of their care from a variety of types of clinicians, usually in several different locations, who function more like a spontaneously assembled “pickup team” than an integrated unit. One patient might begin care with a primary care physician, while others might start with an orthopedist, a neurologist, or a rheumatologist. What happens next is unpredictable. Patients might be referred to yet another physician or to a physical therapist. They might undergo radiology testing (this could happen at any point—even before seeing a physician). Each The impact on value of IPUs is striking. Compared with regional averages, patients at Virginia Mason’s Spine Clinic miss fewer days of work (4.3 versus 9 per episode) and need fewer physical therapy visits (4.4 versus 8.8). 54 Harvard Business Review October 2013 encounter is separate from the others, and no one coordinates the care. Duplication of effort, delays, and inefficiency is almost inevitable. Since no one measures patient outcomes, how long the process takes, or how much the care costs, the value of care never improves. Contrast that with the approach taken by the IPU at Virgirua Mason Medical Center, in Seattle. Patients with low back pain call one central phone number (206-41-SPINE), and most can be seen the same day. The “spine team” pairs a physical therapist with a physician who is board-certified in physical medicine and rehabilitation, and patients usually see both on their first visit. Those with serious causes of back pain (such as a malignancy or an infection) are quickly identified and enter a process designed to address the specific diagnosis. Other patients will require surgery and will enter a process for that. For most patients, however, physical therapy is the most effective next intervention, and their treatment often begins the same day. Virginia Mason did not address the problem of chaotic care by hiring coordinators to help patients navigate the existing system—a “solution” that does not work. Rather, it eliminated the chaos by creating a new system in which caregivers work together in an integrated way. The impact on value has been striking. Compared with regional averages, patients at Virginia Mason’s Spine Clinic miss fewer days of work (4.3 versus 9 per episode) and need fewer physical therapy visits (4.4 versus 8.8). In addition, the use of MRI scans to evaluate low back pain has decreased by 23% since the clinic’s launch, in 2005, even as outcomes have improved. Better care has actually lowered costs, a point we will return to later. Virginia Mason has also increased revenue through increased productivity, rather than depending on more fee-for-service visits to drive revenue from unneeded or duplicative tests and care. The clinic sees about 2,300 new patients per year compared with 1,404 under the old system, and it does so in the same space and with the same number of staff members. Wherever IPUs exist, we find similar results— faster treatment, better outcomes, lower costs, and, usually, improving market share in the condition. But those results can be achieved only through a restructuring of work. Simply co-locating staff in the same building, or putting up a sign announcing a Center of Excellence or an Institute, will have little impact. HBR.ORG IPUs emerged initially in the care for particular medical conditions, such as breast cancer and joint replacement. Today, condition-based IPUs are proliferating rapidly across many areas of acute and chronic care, from organ transplantation to shoulder care to mental health conditions such as eating disorders. Recently, we have applied the IPU model to primary care (see Michael E. Porter, Erika A. Pabo, and Thomas H. Lee, “Redesigning Primary Care,” Health Affairs, March 2013). By its very nature, primary care is holistic, concerned with all the health circumstances and needs of a patient. Today’s primary care practice applies a common organizational structure to the management of a very wide range of patients, from healthy adults to the frail elderly. The complexity of meeting their heterogeneous needs has made value improvement very difficult in primary care—for example, heterogeneous needs make outcomes measurement next to impossible. In primary care, IPUs are multidisciplinary teams organized to serve groups of patients with similar primary and preventive care needs—for example, patients with complex chronic conditions such as diabetes, or disabled elderly patients. Different patient groups require different teams, different types of services, and even different locations of care. They also require services to address head-on the crucial role of lifestyle change and preventive care in outcomes and costs, and those services must be tailored to patients’ overall circumstances. Within each patient group, the appropriate clinical team, preventive services, and education can be put in place to improve value, and results become measureable. This approach is already starting to be applied to high-risk, high-cost patients through so-called Patient-Centered Medical Homes. But the opportunity to substantially enhance value in primary care is far broader. At Geisinger Health System, in Pennsylvania, for example, the care for patients with chronic conditions such as diabetes and heart disease What Is an Integrated Practice Unit? An IPU is organized around a medical condition or a set of closely related conditions (or around defined patient segments for primary care). Care is delivered by a dedicated, multidisciplinary team of clinicians who devote a significant portion of their time to the medical condition. Providers see themselves as part of a common organizational unit. The team takes responsibility for the full cycle of care for the condition, encompassing outpatient, inpatient, and rehabilitative care, and supporting services (such as nutrition, social work, and behavioral health). Patient education, engagement, and follow-up are integrated into care. I A physician team captain or a clinical care manager (or both) over- M sees each patient’s care process. The team measures outcomes, costs, and processes for each patient using a common measurement platform. M The unit has a single administrative and scheduling structure. The providers on the team meet formally and informally on a regular basis to discuss patients, processes, and results. To a large extent, care is co-located in dedicated facilities. Joint accountability is accepted for outcomes and costs. October 2013 Harvard Business Review 55 THE BIG IDEA THE STRATEGY THAT WILL FIX HEALTH CARE Yet the reality is that the great majority of health involves not only physicians and other clinicians but also pharmacists, who have major responsibility care providers (emd insurers) fail to track either outfor foUovnng and adjusting medications. The inclu- comes or costs by medical condition for individual sion of pharmacists on teams has resulted in fewer patients. For example, although many institutions strokes, amputations, emergency department visits, have “back pain centers,” few can tell you about their and hospitalizations, and in better performance on patients’ outcomes (such as their time to return to work) or the actual resources used in treating those other outcomes that matter to patients. patients over the full care cycle. That surprising truth goes a long way toward explaining why decades of health care reform have not changed the trajectory Measure Outcomes and Costs of value in the system. for Every Patient When outcomes measurement is done, it rarely Rapid improvement in anyfieldrequires measuring goes beyond tracking a few areas, such as mortalresults—a feimiliar principle in management. Teams ity and safety. Instead, “quality measurement” has improve and excel by tracking progress over time gravitated to the most easily measured and least and comparing their performance to that of peers controversial indicators. Most “quality” metrics inside and outside their organization. Indeed, rigordo not gauge quality; rather, they are process meaous measurement of value (outcomes and costs) is sures that capture compliance with practice guideperhaps the single most important step in improving lines. HEDIS (the Healthcare Effectiveness Data and health care. Wherever we see systematic measureInformation Set) scores consist entirely of process ment of results in health care—no matter what the measures as well as easy-to-measure clinical indicacountry—we see those results improve. tors that fall well short of actual outcomes. For diabetes, for example, providers measure the reliability of their LDL cholesterol checks and hemoglobin Ale levels, even though what really matters to patients Outcomes Measurement and Reporting is whether they are likely to lose their vision, need Drive Improvement dialysis, have a heart attack or stroke, or undergo since public reporting of clinic performance began, in 1997, in vitro an amputation. Few health care organizations yet fertilization success rates have climbed steadily across all clinics as measure how their diabetic patients fare on all the process improvements have spread. outcomes that matter. It is not surprising that the public remains indifferent to quality measures that may gauge a IN VITRO FERTILIZATION SUCCESS RATES provider’s reliability and reputation but say little UVE BIRTHS PER FRESH, NONDONOR EMBRYO TRANSFERRED about how its patients actually do. The only true measures of quality are the outcomes that matter to patients. And when those outcomes are collected and reported publicly, providers face tremendous pressure—and strong incentives—to improve and to adopt best practices, with resulting improvements in outcomes. Take, for example, the FerCLINIC SIZE tility Clinic Success Rate and Certification Act of NUMBER OF CYCLES PER YEAR 1992, which mandated that all clinics performing assisted reproductive technology procedures, no201-400 tably in vitro fertilization, provide their live birth rates and other metrics to the Centers for Disease 101-200 Control. After the CDC began publicly reporting Sl-lOO those data, in 1997, improvements in thefieldwere 1-50 rapidly adopted, and success rates for all clinics, large and small, have steadily improved. (See the 1997 2011 exhibit “Outcomes Measurement and Reporting DATA SOURCE CENTERS FOR DISEASE CONTROL Drive Improvement.”) 56 Harvard Business Review October 2013 HBR.ORG Outcomes That Matter to Patients: A Hierarchy Measuring outcomes that matter to patients. Outcomes should be measured by medical condition (such as diabetes), not by specialty (podiatry) or intervention (eye examination). Outcomes should cover the full cycle of care for the condition, and track the patient’s health status after care is completed. The outcomes that matter to patients for a particular medical condition fall into three tiers. (For more, see Michael Porter’s article “Measuring Health Outcomes: The Outcome Hierarchy,” New In measuring quality of care, providers tend to focus on only what they directly control or easily measured clinical indicators. However, measuring the full set of outcomes that matter to patients by condition is essential in meeting their needs. And when outcomes are measured comprehensively, results invariably improve. Tier 1 Health status achieved or retained Survival EXAMPLE: HIP REPLACEMENT • Mortality rate (inpatient) Degree of health or recovery • Functional level achieved • Pain level achieved • Extent of return to physical activities ‘ Ability to return to work England Journal of Medicine, December 2010.) Tier 1 involves the health status achieved. Patients care about mortality rates, of course, but they’re also concerned about their functional status. In the case of prostate cancer treatment, for example, five-year survival rates are typically 90% or higher, so patients are more interested in their providers’ performance on crucial functional outcomes, such as incontinence and sexual function, where variability among providers is much greater. Tier 2 outcomes relate to the nature ofthe care cycle and recovery. For example, high readmission rates and frequent emergency-department “bounce backs” may not actually worsen long-term survival, but they are expensive and frustrating for both providers and patients. The level of discomfort during care and how long it takes to return to normal activities also matter greatly to patients. Significant delays before seeing a specialist for a potentially ominous complaint can cause unnecessary anxiety, while delays in commencing treatment prolong the return to normal life. Even when functional outcomes are equivalent, patients whose care process is timely and free of chaos, confusion, and unnecessary setbacks experience much better care than those who encounter delays and problems along the way. Tier 3 outcomes relate to the sustainability of health. A hip replacement that lasts two yeeurs is inferior to one that lasts 15 years, from both the patient’s perspective and the provider’s. Measuring the full set of outcomes that matter is indispensable to better meeting patients’ needs. It is also one of the most powerful vehicles for lowering health care costs. If Tier 1 functional outcomes improve, costs invariably go down. If any Tier 2 or 3 outcomes improve, costs invariably go down. A 2011 German study, for example, found that one-year follow-up costs after total hip replacement were 15% lower in hospitals with above-average outcomes than in hospitals with below-average outcomes. Tier 2 Process of rec Time to recovery • Time to begin treatment • Time to return to physical activities • Time to return to work Disutility of care or treatment process (for instance, diagnostic errors, ineffective care, treatment-related discomfort, complications, adverse effects) Delays and anxiety Pain during treatment Length of hospital stay Infection Pulmonary embolism Deep-vein thrombosis Myocardial infarction Need for re-operation Delirium tainability of healt Sustainability of healtli or recovery Nature of recurrences Long-term consequences of therapy (for instance, care-induced illnesses) ‘ Maintained functional level ‘ Ability to live independently ‘ Need for revision or replacement Loss of mobility due to inadequate rehabilitation Risk of complex fracture Susceptibility to infection Stiff knee due to unrecognized complications Regional pain syndrome SOURCE “MEASURING HEALTH OUTCOMES,” MICHAEL E. PORTER, NEW ENGLAND JOURNAL OF MEDICINE, DECEMBER 2010 and 24% lower than in very-low-volume hospitals, where providers have relatively little experience with hip replacements. By failing to consistently measure the outcomes that matter, we lose perhaps our most powerful lever for cost reduction. Over the past half dozen years, a growing array of providers have begun to embrace true outcome measurement. Many ofthe leaders have seen their reputations—and market share—improve as a result. A welcomed competition is emerging to be the October 2013 Harvard Business Review 57 THE BIG IDEA THE STRATEGY THAT WILL FIX HEALTH CARE Why Change Now? Most hospitals and physician groups still have positive margins, but the pressure to consider a new strategic framework has increased dramatically. Market forces are driving increasing numbers of hospital mergers and acquisitions, and the number of hospital beds has declined in the U.S. from 3 beds per 1,000 people in 1999 to 2.6 in 2010. Reimbursement rates are under pressure. Physician income has remained static over the past decade, and physicians know that simply working harder, faster, or longer can’t compensate for their steadily increasing expenses. Meanwhile, national retailers like Walmart, CVS, and Walgreens are going after the primary care mari Purchase answer to see full attachment Tags: leadership healthcare supply and demand Pfizer Global Pharmaceutical Industry User generated content is uploaded by users for the purposes of learning and should be used following Studypool’s honor code & terms of service.