Value Based Health Care at King’s College Hospital: Evaluation Report
Robert Lee, Susan Trenholm,Alex Tulloch * and Ewan Ferlie*
King’s College London
* Joint Senior Authors
Not for Publication or Quotation
9thApril 2015
Preface
In preparing this report, we gratefully acknowledge financial support for the evaluation of the Value Based Health Care Project from King’s College Hospital and the Health Foundation. We also thank the clinical staff and managers at King’s College Hospital who allowed us to observe their meetings and other working activities, gave us access to documents and information, gave us their time for interviews and talked to us about their work and the Project.
Although we have worked closely with clinical staff and managers in the Hospital in undertaking this evaluation and have tried to make sure that the evaluation is helpful to the development of value-based health care and to the work and organisation of the Hospital more generally, we are also committed to academic standards of rigour and honesty. The findings and conclusions presented in this report are the responsibility only of the four authors of the report; they do not necessarily reflect the views or conclusions of the clinical staff or managers who participated in the project or of King’s College Hospital or King’s Health Partners.
This Evaluation Report has been written at the same time as the Value Based Health Care End of Implementation Report prepared by the Project staff in King’s College Hospital. The Evaluation Report and the End of Implementation Report have much in common as well as some differences of focus and emphasis.
- Both reports contain detailed information about and analyses of:devolved team structure; initial discussions on value; complexities of data collation, processing and analysis; the appointment and role of the Project data analyst; the nature and uses of the value equation; the value dashboard; service improvements; data relating to KCH rather than the whole cycle of care.
- The End of Project Report contains more emphasis or detail than the Evaluation Report about: specific service improvements; quantified return on investment; quantified value graphs through time; proposals for embedding and spreading the results of the Project.
- The Evaluation Report contains more emphasis or detail than the End of Project Report about: critical analysis of Porter's ideas about value; summative assessment of achievements and limitations of the Project in relation to its original aims; the impact on the Project of changes in the external organisational environment; impact of internal organisational structures and processes on the progress and achievements of the Project.
Because the evaluation was undertaken with the assurance that the individuals who participated in it as interviewees or in other ways would not be individually identifiable, we have used generic job titles and pseudonymised initials in this report to refer to the participants.
In undertaking and writing up this evaluation we have had three audiences in mind. For a research and academic audience we are preparing research papers for publication in high quality academic journals. We have prepared the present report that contains a detailed review of the relevant academic literature and describes in full the methods and findings of the evaluation. This report is a working document, rather than a final production that is in itself intended for publication; it will serve as a source of material for the academic papers.
For policy makers and board level executives in the NHS and funding organisations we have prepared an Executive Summary that focuses on the main implications of the Value Based Health Care Project for the development of ideas and initiatives about value in health care in the NHS and health services more widely. For senior managers and directors in King’s College Hospital, King’s Health Partners, the Health Foundation and other organisations we have prepared a Summary Evaluation Report that provides an assessment of the achievements and outcomes of the Value Based Health Care Project that can be used in the design and development of further initiatives in KCH or other settings relating to value-based initiatives and service improvements. Copies of a report containing the Executive Summary and the Summary Evaluation are available on request from
The authors’ responsibilities and affiliations are as follows:
- Robert Lee has been a Research Assistant in the Department of Management at King’s College London since September 2013.
- Susan Trenholm was a Research Assistant in the Department of Management at King’s College London until August 2013.
- Alex Tulloch is a Lecturer in the Department of Health Services and Population Research at King’s College London.
- Ewan Ferlie is Professor of Public Services Management in the Department of Management at King’s College London.
Chapter Contents
Chapter 1 Introduction
Chapter 2 Literature Review and Research Questions
Chapter 3 Research Strategy and Methods
Chapter 4 Findings
Chapter 5 Summative Evaluation
Chapter 6 Discussion and Conclusions
Chapter 7 Implications
Abbreviations
References
Appendix 1: Interview Guides
Appendix 2: Coding Frame
Appendix 3: Quantitative Analyses of Value
Detailed Contents
Chapter 1 Introduction
Chapter 2 Literature Review and Research Questions
2.1 Porter’s Concept of Value in Health Care
2.2 Organisational Change and Innovation
2.3 The Creation, Translation and Transfer of Knowledge
2.4 Information Systems as ‘Boundary Objects’
2.5 Empirical Studies of the Value of Health Care
2.6 Research Questions
Chapter 3 Research Strategy and Methods
3.1 Research Strategy
3.2 Research Design, Access and Approvals
3.3 Data Collection
3.3.1 Quantitative Data Collection
3.3.2 Qualitative Data Collection
3.4 Data Processing, Coding and Analysis
3.4.1 Quantitative Data Processing and Analysis
3.4.2 Qualitative Data Processing and Analysis
3.4.3 Summative Evaluation
Chapter 4 Findings
4.1 The Operationalisation of Porter’s Ideas about Value
4.1.1 Origins and Set-up: The Measurement of Value
4.1.2 Origins and Set-up: Leadership and Change
4.1.3 Measuring Outcomes and Costs: January to June 2013
4.1.4 Value Metrics and the Value Dashboard: July to December 2013
4.1.5 Service Plans and Service Improvements: January to June 2014
4.1.6 Improve, Embed and Spread: The VBHC Project July to December 2014 and March 2015
4.2 Organisational Context and Influences
Chapter 5 Summative Evaluation
Chapter 6 Discussion and Conclusions
Chapter 7 Implications
Abbreviations
References
Appendix 1: Interview Guides
VBHC Phase 1 Interview Guide
VBHC Phase 2 Interview Guide
Appendix 2: Coding Frame
Appendix 3: Quantitative Analyses of Value
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Chapter 1Introduction
There has in the last 10 years been an increase of interest in the idea of ‘value’ in health care. Porter and Teisberg (2006) at Harvard Business School in the United States, building on Porter’s earlier research on business strategy in the market economy, defined value as the relationship between outcomes and costs. Theyargued that value based competition in health care would help doctors and patients together make the best decisions about treatment and care in the interests of patients. Porter (2009, 2010) in papers in the New England Journal of Medicine developed in more detail arguments about how these ideas could be put to practical use to reform the health care system in the United States. As we will show in Chapter 2 Porter’s ideas about value have been cited widely in the professional and academic health care literatures, especially in the United States in the context of the Affordable Care Act of 2010, but also in Canada, the United Kingdom and other European countries. This report examines the ways in which Porter’s ideas about value in health care, which were developed in the context of competition in health care in the United States, have been operationalised in the different context of the National Health Service in England.
In 2011 the Health Foundation in England invited bids for funding as part of its Shared Purpose programme. The Shared Purpose programme aimed to raise awareness of the role corporate support services could play in improving quality of care, create examples of best practice in corporate support services and clinical services working together to improve quality of care, and develop the evidence base of what works in improving care through aligning corporate support and clinical services around common quality goals. In 2012 the Foundation made a grant of £420,000 to King’s College Hospital NHS Foundation Trust (matched by funding from within KCH of £480,000) for a development project to run from July 2012 to March 2015 called ‘Value-based Reporting and Management at King’s College Hospital’. This project, subsequently known as ‘Value Based Health Care’ (VBHC), aimed to put into practice Porter’s concept of value in healthcare by developing and implementing a new system of ‘value-based reporting’ at KCH.
The Health Foundation, as part of its Shared Purpose programme, provided funding for academic evaluation of the each of the development projects. The Foundation did not prescribe the form of the evaluations but allowed them to be determined locally by the project directors and local evaluators. This report contains the evaluation undertaken by academic staff at King’s College London of the Value Based Health Care Project at King’s College Hospital. In this report we will:
- tell the story of the translation of Porter’s ideas about value from academic writings in the United States into practical activity in the provision of health care in England;
- examine the technical and organisational processes though which this process of adoption and adaptation took place; and
- assess the results of these processes by examining qualitatively and quantitatively the deliverables and outcomes of the VBHC Project in relation to its aims.
We intend in this report not only to provide an account of the successes and limitations of the project but also to demonstrate something of the processes leading to these outcomes. In doing this we will not provide a blow-by-blow account of the day-to-day work of the project; instead we will focus on the main features of the technical and organisational processes through which Porter’s ideas – the continuities and the changes in those ideas – were translated into reporting systems, practical management activities and service improvement in one hospital in the NHS in England. We hope that our findings and conclusions will not only support service improvement in health services in the UK but also, through publication in academic journals, contribute to knowledge about the transmission and translation of management ideas and knowledge between different settings more generally.
Chapter 2Literature Review and Research Questions
In Chapter 1 we said that our intention in this evaluation was not simply to provide an assessment of the successes and limitations of the Value Based Health Care Project, but also to examine the technical and organisational processes through which Michael Porter’s ideas about value were translated into practice at King’s College Hospital. In this chapter we therefore outline five sets of literature that relate to these translational processes and guide the formulation of our research questions.
First, we summarise the main arguments presented by Porter and Teisberg (2006) in their book ‘Redefining Health Care: Creating Value-Based Competition on Results’ and then examine the ways in which Porter developed these ideas especially in two papers in the New England Journal of Medicine in 2009 and 2010. Second, we examine social science literature about ways in which information systems and technology function in organisations. Next we draw on the sociology of science literature about the ways in which knowledge is created, adopted and spread in different settings; this provides us with an initial framework for analysing the ways in which the ideas of Porter and Teisberg have been translated into practice. Then we draw on empirical research literature about influences on and processes of organisational change and innovation; this literature adds to our framework by focusing more closely on the organisational structures and mechanisms through which Porter’s ideas have been translated into practice. Finally we review recent empirical studies drawing on Porter’s ideas about value in health care in order to identify published research that may already have examined the ways in which those ideas have already been operationalised in practice.
It is our intention by combining these different perspectives in a single analytical approach and theoretically informed framework to provide a broader and conceptually grounded account of the progress and achievements of the Value Based Health Care Project.
2.1Porter’s Concept of Value in Health Care
The major starting point of this study is Porter’s ideas about value in health care, as presented by Porter and Teisberg (2006). Although issues have rarely been framed in terms of ‘value’, there has been, in the United Kingdom, United States and many other countries, a long history of concern about the effectiveness, quality and cost of health care. Effectiveness is about the effects of treatment and care on the health and well-being of patients individually and populations more generally (Cochrane 1972). Quality focuses on the identification and meeting of explicit standards of care and service provision (Donabedian 1980, Maxwell 1984). The cost of the National Health Service has been an issue since the late 1940s (Ministry of Health 1956, Abel-Smith 1976, Webster 1998) and remains a matter of substantial public and political concern. But, despite Cochrane’s argument that the optimum results of health services must be expressed in terms of the benefit and cost to the population, effectiveness and quality have all too often been considered separately from cost (see for example Abel-Smith 1976,Department of Health 2008). Although the remit of the National Institute for Health and Care Excellence (NICE) in the UK focuses on the promotion of high quality care within the available finite resources, the lack of evidence about the relationship between costs, quality and outcomes means that NICE quality standards and clinical guidelines focus almost exclusively on quality and outcomes rather than the value of those outcomes. Despite a variety of attempts to combine clinical and financial information within management systems (Fetter and Freeman 1986, James and Savitz 2011), effectiveness and quality have often been seen as the responsibility of doctors, nurses and other clinical staff; cost and organisation of services as the concern of managers. This separation has reinforced differences of outlook and priority, differences that have made it difficult to ensure that health services provide at one and the same time the best value for money and the best value for patients.
Porter and Teisberg (2006), building Porter’s earlier research on business strategiesin competitive markets in the economy generally, developed the argument that value based competition in health care would help doctors and patients together make the best decisions about treatment and care in the interests of patients. They wrote in the context of failed attempts in the United States to reform the provision of health care and continuing concerns there about the rising costs of health care. They focused on the quality of outcomes relative to dollars spent on all activities (including rehabilitation and long-term management) over the full cycle of care for particular medical conditions. They argued that, because practice guidelines tend to ossify care processes and have failed repeatedly to driveimprovements, better value for patients will only come from competition between providers. Information about results must be made widely available so that physicians and patients can make appropriate choices about referrals and treatment. Competition according to Porter and Teisberg will improve outcomes and the quality of care, reduce costs and as a result increase value.
Chapter 4 of Porter and Teisberg (2006) presents the principles of their argument for value-based competition in health care. There are three main strands to the argument: value; competition; and medical conditions. ‘The right objective for health care is to increase value for patients, which is the quality of patient outcomes relative to the dollars expended.’ (page 98). At the top of the information hierarchy are ‘patient results’ (outcomes, costs and prices) (page 124). Although ‘Outcome measurement is complex’ (page 126), value is driven by provider experience, scale and learning in medical conditions: ‘Value in health care delivery is created by doing a few things well, not by trying to do everything.’ (page 111). This will lead to a virtuous circle of greater experience, greater expertise, increased sub-specialisation, greater volume, dedicated support facilities, better results, improved reputation, more referrals and continued improvement.
Competition between providers of health care will encourage providers to innovate and learn from each other to increase value. ‘Practice guidelines have failed repeatedly to drive widespread process improvements.’ (Porter and Teisberg 2006, page 102). Evidence-based medicine only results in slow diffusion of best practice. Competition must be based on results. Innovations that increase value must be strongly rewarded. ‘The only way for value to increase rapidly and broadly in health care is through competition based on results.’ (page 101) ‘Providers need to be compared on results, and excellent providers rewarded with more patients.’ (page 102) ‘The right kind of competition, enabled by results information, will unleash rapid innovation and lead to dramatic improvements in value.’ (page 143). Mortality rates are lower in specialist centres with high volumes of patients than in centres with lower volumes of patients. With competition, ‘capacity in a medical condition will be reallocated from less effective providers to more effective providers.’ (page 117).