Key strategies healthcare leaders need to benefit from VBHC

Prof. Dr. Fred van Eenennaam

Chairman of VBHC Europe & Founder of The Decision Group

Gillian Hall

Global Lead Roche Healthcare Consulting - Roche Diagnostics

Key strategies healthcare leaders need to benefit from VBHC

6 April 2022 | 14min

Quick Takes

  • The path to implementing VBHC starts with understanding where the value is, jumping in and starting projects, and accepting there will be variation due to personalization

  • Leaders need to empower, enable, and trust their teams to use their expertise to achieve what needs to be done to succeed

  • Take an analytical approach and implement a VBHC project that can really make a difference and use a variety of measurements to evaluate its progress

Over the last 15 years, there has been a movement towards value-based healthcare (VBHC) as a potential response to many of the challenges facing healthcare systems today. Introduced in 2006 by Michael Porter and Elizabeth Teisberg, the concept of VBHC at its essence is a patient-centered approach to healthcare delivery focused on improving the health outcomes that matter most to patients across the entire cycle of care. But, what are the key strategies healthcare leaders need to follow to implement value-based healthcare (VBHC)?

Professor Dr. Fred van Eenennaam is a leading global expert in VBHC. He has both a business and academic background and has been working in life science and health for the last 25 years. He is the Chairman of the VBHC Center Europe Amsterdam, The Netherlands, a country where VBHC has made some of its greatest progress.  

In this interview, Gillian Hall, Head of Global Roche Healthcare Consulting at Roche Diagnostics International asks Professor van Eenennaam to share the top actions, mindset, and behaviors that leaders wanting to implement VBHC should embrace for success.

VBHC: Balancing the inputs and outputs of healthcare systems

Gillian Hall: What, in your mind, is the “burning platform” and why is there a need for change within healthcare?

Prof Dr. van Eenennaam: The big question around healthcare is “why don’t we really see a relationship between what we put in and what we get out?” I think that is the burning platform: in our systems today, we have difficulties with access and see great ideas to improve healthcare implementation, but most of the time we’re still disappointed with the result. 

Now, 15 years on from Porter and Teisberg’s original work, we can see that VBHC can move us toward a more sustainable healthcare system – and not at the expense of patients, taxpayers, or anything else. 

We now know how to implement VBHC, and we know that not only does it work conceptually, but it really works, and it works for almost all medical conditions. We have great working examples, with more than 1200 successful implementations worldwide. Never perfect, perhaps, but successful implementations nonetheless. So that, I think, is where we stand today and we need to continue the journey towards VBHC.

How can leaders start on the journey towards VBHC?

Gillian Hall: The healthcare system is so big and complex that making those systemic changes, from a hospital leadership point of view, may be overwhelming. What are your recommendations for a hospital leader to practically start on that journey? 

Prof Dr. van Eenennaam: 

1. Understand where the value is. If you are a hospital or health system leader, the simple thing is to understand that patient value is created by doctors and their teams, and patients and their families. Everything you want to change should be clearly linked to improving that interaction. In essence, you yourself must take a backseat, because your role is to support and enable the teams to perform their duty. Up until now, there is this idea that we should approach VBHC from a high-level, macro, top-down perspective. But a push of rules, systems, and payment systems become almost ideological, and they end up second-guessing doctors and second-guessing people. 

2. Simply start. Coming from business, your first question is always “where is the value created”? To my amazement, we started awarding the VBHC prize several years ago, and it turns out it’s the only prize in the world where people get an award if they deliver great patient value. And I think that says it all: we’ve become too wrapped up in trying to think of a system. So my recommendation would be, early on, to just start doing VBHC and see how you can make it work. 

3. Accept some variation for personalization. Of course, in healthcare, there is what we call variation, but only some of that variation is unwanted. It doesn’t make sense to think of patients as cars, but to a certain extent you want to use knowledge from the automotive industry, or others, to eliminate unwanted waste. Yet, you need to embrace desired variation, because clearly patients are biologically and socially different from one another. You can’t move too far to either extreme. Healthcare systems have either gone overboard in removing unwanted variation, under the guise of freeing up capacity for patients, which doesn’t really work; or, they did the opposite and they treated every patient individually as a new case, which is also not smart.

As a hospital leader, the real learning and the real change perspective of value-based healthcare is: embrace meaningful variation and work with it, while getting rid of unwanted variation. You have to master that balance, because if you go too far one way or another, you can do a lot of damage. 

Enable and trust your team to do their best

Gillian Hall: As a follow-up, how could a hospital leader identify and keep a check and a balance on what is meaningful variation? It sounds complex to strike that balance.

Prof Dr. van Eenennaam: I’d say, accept the fact that if you run a hospital that treats around 260 medical conditions, with countless professionals, and supporting professionals and networks, it’s just an illusion to imagine you can run that like a factory. Managing professionals is a kind of art, right? And that means you need trust. I think modesty is a key thing. You need to take a backseat: trust, but verify that the work is done, instead of imposing what needs to be done. Select your teams, develop them, and accept that there’s going to be variation. It’s not the enemy. 

In VBHC, if you want to create patient value, you need all the activities for that patient to be seamlessly organized. So as a hospital leader, you want your people to have a patient group or a patient stratification focus. But you are surrounded by very detailed systemic rules in all aspects of that work. And that’s why you’re a leader. You’re there to make sure that your people are able to do their jobs within all those rules and regulations. 

To make an analogy: you’re conducting an orchestra, and it’s not your job to prescribe exactly how somebody else should play, for example, the tuba, the violin or whatever. And there is no way to explain to the violin player exactly how he or she should do that after many years of training. But that doesn’t mean that the violin player doesn’t need to play as part of the orchestra.

You also need to demand that your teams show their learnings, whether good or bad. You need to create a safe environment where they can do that. It takes courage, given all the pressure you are under – but you are not just there to fill out budgets! 

The most important thing is people. Healthcare is a people’s business on all sides. And if we, you and I, are allowed to help that interaction to become 10% better, we’ve done a good job. We should applaud that.

Prof. Dr. van Eenennaam

Focus on moving the needle with VBHC initiatives 

Gillian Hall: How can a healthcare leader best pick the best area to start with VBHC? Should they look for outside examples, or inside their own organization at an area where they have a particular concern? 

Prof Dr. van Eenennaam: I would say use the cool-headed analytical approach. Don’t do it if it’s not going to move the needle: it’s not worth it if it’s small, or if it only requires one or two disciplines to work together to get it going. Find something big that can really make a difference, which requires a team of different disciplines to work together. 

Equally important is understanding if you have the right team, and leadership in place to support it. Do you have people who will step to the plate, who understand that it’s exciting but tough? Who has enough social capital, experience and background to see it through? 

You also need to be able to provide enough support in terms of capabilities. That means somebody to run projects, good training, some coaching. You need to work to get your data in order, improve learning, identify outcomes and stratification. You’re basically running this as a mini-hospital within the hospital, so you need to have some capacity to support that effort at the outset. 

You also have to manage expectations, because there may be many people in your organization who want to start a VBHC program, but you have to prioritize where you start. Your team is only as strong as those who are not part of the main team right now, so they need to stay engaged. 

I believe that if you’re in a leadership position, you need to think about the transformation of your group. We’re going to move from A to B, and are we going to do that by embracing VBHC as a principal form of transformation? Part of that is understanding the soul of the hospital. Is it a teaching hospital by nature? Is it a rehab? Does it have a strong sense of community? That sort of insight determines what will be the areas in which you will work. Think about your population: will you really move the needle? Can you do it? Can you do it sensibly? Can you get enough of the right patients? Can you build it up? That’s what you need to consider as you start implementing value-based healthcare. 

Gillian Hall: This concept of a soul for the hospital feels almost like step one. It is linked to the cultural side but there’s a practical, tangible element to it as well. 

Prof Dr. van Eenennaam: I’m hesitant to say that’s the starting point. I think the starting point is to really do the cool, sharp analysis from the medical/strategic/economic perspective. But I would not want to say let’s stick with the “history and the soul”, and that’s simply the way we do it. It’s one aspect, no more important than another. You should consider what is really needed from that angle, and that will help you transform other parts of the hospital. That being said, I think if don’t have the leadership, if you’re not feeding into the soul, it’s going to be a very painful transformation. Which might be ok!  

There are many people who say you should start with the soul, but I guess I’m a little bit of a business guy. Maybe that is the place to start, but you should be careful to not just embrace the status quo. 

Patient involvement in VBHC is essential, but the exact “How?” is less clear

Gillian Hall: When should patients get involved?

Prof Dr. van Eenennaam: I think the honest answer is we’re learning. We don’t have a very clear, definite answer on it yet. The question is, when do you want to get patients involved? There are a couple of areas where it makes a lot of sense to have patients involved. 

I believe that if it’s your health, or your loved one’s, you’re going to be involved. And ultimately, you can decide yes or no to take the treatment. There is, of course, room for doctors to say, “This is not a treatment that we will provide,” but ultimately you, as a patient, decide. You cannot get a treatment that you don’t want, or do not accept. Joint consent is needed everywhere. And we are making strides on addressing the fact that certain parts of the population have different access and different outcomes, which cannot be attributed to medical reasons. I think this is one area that brings the most value immediately for patients.

On a broader level, do you want to have patients on your board? Do you want to have patient advocacy groups who are going to advise you over the whole hospital or the whole healthcare system? I think most struggle with it, but I think it’s important to consider. I think having patients be part of that decision-making process and bringing key points forward would be beneficial. 

When it comes to organizational governance, patients should definitely be included. But for healthcare leaders and executives this is a little bit uncomfortable because everything is so new. You’re talking at such a high level on detailed things. One recent development with regard to governance is to provide advocacy groups with an instrument to track patient-reported experience measures so leaders can use this data in improvement cycles. 

Measure success with a variety of indicators

Gillian Hall: How should leaders really measure success? Is it more on patient-reported outcomes, is it clinical outcomes? What do you see as the main indicators of success that leaders should take in?

Prof Dr. van Eenennaam: Michael Porter has come up with a brilliant hierarchy of outcomes. It’s brilliant because it’s much smarter than the quality of life adjusted measures, perception measures, or the efforts of quality management that we have traditionally used. Medical outcomes typically are at the top of the hierarchy, but we see all these quality of life measures popping in. This is a good basis and strong starting point of the discussion with patients.

Measuring medical and quality of life outcomes related to what the patients want is great, but you should also have those that measure the experience. To me, those should be the core. Beyond that, we’re now seeing attempts to measure value for society: people can go to work or have a better life, there’s value for industry because we have more innovation, there’s more employment, etc. So, there are other things in terms of value that we may want to measure as well.

But I may have underestimated the need to also show second, third, and fourth-order value effects. For example, team satisfaction has a strong correlation with good outcomes. Historically healthcare teams never measured their outcomes.

So I would say medical, quality of life, experience, plus healthcare team satisfaction measures, would be important to know as a hospital leader.

Be engaged and develop trust with your team

Gillian Hall: We talked about getting the right team in place, starting small, that hospital within a hospital, to try and actually start the first project. Regarding trust and verification, how should leaders look to do the verify step? How do they know when it’s working, and when to maybe admit that it’s not? 

Prof Dr. van Eenennaam: The practical answer is there is an advantage in starting small: that’s how you get experience. You’re not going to start running a marathon when you’re just born, right?  

Now, how do you do the trust and verify? It’s the same as you might do with your children. The most important thing from a leadership perspective is, if the numbers are not as good as you’d hoped, that’s your moment of truth. You have to think as you might with your children when they do something wrong say:  “Daddy loves you, but he thinks you should not do this. How can we do this better the next time? How can we address this?” So, it’s a psychological contract in that sense, so that is what I would rely on, number one.

Number two: of course, we have all these systems, but as a leader, you don’t want numbers and systems to get in the way of your psychological contract. You still need to talk about them, but you should not delegate this trust issue to a controller or somebody else. You should be there and do that yourself. The old saying is “what gets measured, gets done.” And I think that’s important, but I also believe that “what gets measured, gets manipulated” if you don’t underpin that with psychological trust. And you should be very clear that cheating or cutting corners on the numbers will not be tolerated, but dealt with harshly.

Persistence and determination will lead to rewards 

The fact is, we have a real shortage in healthcare at the moment, with issues that existed before the pandemic becoming even more evident. Some people tell me they can’t do value-based healthcare light or value-based healthcare because “I’m already so busy” and this is on top, on top, on top, on top of my daily work. And I understand that. 

But, value-based healthcare is not something you do on Monday, and next year you do something else. It’s really exciting, but it requires a real commitment. It’s good to do, we have great examples of people who’ve done it, but it’s a journey with ups and downs. You have to be ready for that and truly committed to making it work. And in the end, it will work if done right. 

Prof. Dr. Fred van Eenennaam is an important advocate for value-based healthcare. He brought the concept of VBHC from the US to Europe by founding the VBHC Center Europe, a leading platform for visitors and members who want to learn about VBHC implementation. He is also a professor and strategy consultant in the healthcare sector and the Dean and President of The Decision Insitute, a pioneering business school that specialized in creating business breakthroughs that make a difference in organizations/teams. For Prof. Dr. van Eenennaam, VBHC is the only way to focus on what is essential in healthcare – the value for patients.

Gillian Hall has over 20 years of experience working in healthcare, across both provider and industry roles. She is passionate about solving complex problems to enable optimization of care pathways that ultimately improve patient outcomes.

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