Kenneth Kaufman: Beyond healthcare's tipping point

As I speak with healthcare professionals and journalists, the question I am most frequently asked is, "When will we reach the tipping point for a value-based health system?"

The exact wording of the question varies, but the phrase "tipping point" is usually included. The more I consider this question, the more I think that its answer may be embedded in the question itself.

Although I doubt that all the people who ask this question have read Malcolm Gladwell's excellent book "The Tipping Point," I do believe the book both shaped and reflects the way people use this term. Gladwell defines "tipping point" as a specific moment that brings unexpected and rapid change. He frequently compares a tipping point to the threshold of an epidemic. The two examples that anchor Gladwell's book occurred in the mid-1990s: the spike in popularity of Hush Puppies shoes (a trend that missed me) and the drop in New York City's crime rate. According to Gladwell, both changes were unexpected, and both "happened in a hurry" rather than building "steadily and slowly."

This framework is undeniably appealing in the context of health system change. It suggests that at some point, a switch will be thrown and value-based healthcare will be pervasive. The sudden change may be difficult to manage, but less so than protracted change at an uncertain rate and with different manifestations in different markets. Further, the tipping point concept plays on the universal fascination with predicting the future. If we know about an event far enough ahead of time — a hurricane, a stock market change — then we can prepare and perhaps even profit.

In addition, the tipping point concept looks at the process of change within a fairly narrow timeframe rather than as part of a broader, potentially more complex, but also more revealing pattern. A trend line of hurricanes in a particular coastal town over two decades will look very different than the trend line for a region over a hundred years. Finally, examples of tipping points tend to focus on events or behaviors that are relatively easy to observe and quantify, rather than on broader, more complex types of change.

A long view of change

In contrast, change in the healthcare delivery system tends to occur over a longer time with a series of peaks and valleys. Consider, for example, the cluster of approaches to healthcare quality, such as continuous quality improvement and total quality management, that emerged in the 1980s. These concepts entered the realm of healthcare after many years of development in other fields. W. Edwards Deming's systems-focused approach to quality first gained prominence in Japan in the early 1950s and in American industry in the early 1980s. Once these concepts became part of the healthcare dialogue, they received several years of intense attention, followed by growing skepticism and a quick decline in visibility.

However, the core tenets of continuous process improvement and organizational redesign have proved remarkably tenacious, evolving into new approaches and ultimately transcending particular labels to become a core competency for success. Examining healthcare quality improvement solely in the context of whether a single approach reached a tipping point would miss the larger pattern of significant progress.

Value-based healthcare is following much the same pattern. The basic concepts of value-based care emerged in the early 1970s, first found policy expression in the Health Maintenance Organization Act of 1973, and proliferated in the late 1980s in the form of managed care and capitation. Implementation problems and adverse public opinion led them to fall from favor, but the idea of linking payment incentives to care management never went away and form the basis for multiple policy proposals, insurance plan designs, payment methods and delivery models. Many regions and organizations have made significant strides in managing quality and cost by linking value-oriented payment with advanced care management.

Faster and louder

At more than 17 percent of the nation's GDP, healthcare may simply be too big to be subject to the kind of sudden change that might be seen in shoe sales or even a big city's crime rate. Rather than trying to predict a tipping point in healthcare delivery, a better approach may be to listen to the long-term drumbeat. And the drumbeat for value has been with us for decades and is growing considerably faster and louder.

Policymakers see clearly that healthcare spending is at the root of the nation's large and growing budget deficit. There is near-universal agreement among policymakers, payers and providers that a key to solving this problem is creating payment incentives that reward health promotion and care in the least intensive appropriate settings.

The adoption of value-based payment is growing rapidly. The percentage of value-oriented payments to doctors and hospitals grew from 11 percent to 40 percent between 2013 and 2014, according to the coalition Catalyst for Payment Reform. Expectations for the future of value-based payment also are growing. The percentage of hospitals that expect more than 50 percent of their revenue to be tied to value-based payment within the next two years tripled from 7 percent to 22 percent within a six-month period, according to a recent Kaufman Hall survey.

In January, CMS announced its goal of moving at least 50 percent of its payments into value-based mechanisms by 2018. Just two days later, a task force of influential providers and payers announced their goal of moving 75 percent of their business under value-based payment by 2020.

At the same time, the use of high-deductible health plans has grown an average of 15 percent per year since 2011, according to America's Health Insurance Plans. Increased consumer responsibility for healthcare costs has led to an escalation in the number of tools to compare cost and quality, and new care options that emphasize low cost and high convenience — from retail pharmacy clinics to online diagnosis and treatment. Innovations in technology, structure, and process also are ushering in enhanced capabilities that enable providers to identify high-risk patients and to monitor and manage their health in the least expensive appropriate settings.

Moving ahead

The long-developing drumbeat for value, with many changes in pace and volume, has become continuous and noticeable. Unlike a tipping point, which is hard to prepare for without unusual powers of prediction, healthcare organizations have ample forewarning of the basic trajectory of health system change. However, the way that change is playing out in each market is far more complex than an increase in Hush Puppies sales. And the way each provider organization can and should respond is far more complex than ramping up manufacturing production.

Managing in an environment of complex change requires that executives be able to analyze many market dimensions, develop and plan for multiple scenarios, and move rapidly to make the fundamental changes needed in their organization's technology, system configuration, and clinical and business processes. None of this is possible, however, without a commitment to the inevitability of change. Organizations that committed early to continuous quality improvement were in the best position to successfully develop that critical competency. Similarly, organizations that use value-based payment and delivery models now, even on a limited scale, are better positioned for success as the delivery system continues its rapid progress toward broad implementation of value-based care. In healthcare, waiting for a tipping point means waiting too long.

Your comments are welcome. I can be reached at kkaufman@kaufmanhall.com.

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