Value Management in Healthcare : How to Establish a Value Management Office to Support Value-Based Outcomes in Healthcare book cover
1st Edition

Value Management in Healthcare
How to Establish a Value Management Office to Support Value-Based Outcomes in Healthcare

ISBN 9781138104426
Published October 11, 2017 by Productivity Press
337 Pages 47 B/W Illustrations

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Book Description

"Nathan Tierney’s powerful storytelling is rarely seen in today’s health care business environment. We must redesign the health care delivery system---a team sport in service of patients, hold it accountable with measurement to improve outcomes, and quantify the resource costs over the full cycle of care. Value-based health care is a framework through which these goals are achieved, and Tierney provides a detailed playbook to get your organization there. Outlined in incredible detail and clarity, he presents core concepts and dives into the key metrics needed to build, maintain, and scale a successful value-based health care organization. Nathan shares a realistic vision of what any CEO should expect when developing their own Value Management Office. Nothing is more important to me than improving the lives of those I love. My personal mission is to create systemic change with an impact on the global stage. This playbook needs to be on the desk of every executive, clinician, and patient today."  

-Mahek Shah, MD, Senior Researcher and Senior Project Leader, Harvard Business School

Our current healthcare system’s broken. The Organization for Economic Co-Operation and Development (OECD) predicts health care costs could increase from 6% to 14% of GDP by 2060. The cause of this increase is due to (1) a global aging population, (2) growing affluence, (3) rise in chronic diseases, and (4) better-informed patients; all of which raises the demand for healthcare.

In 2006, Michael Porter and Elizabeth Teisberg authored the book ‘Redefining Health Care: Creating Value-Based Competition on Results.’ In it, they present their analysis of the root causes plaguing the health care industry and make the case for why providers, suppliers, consumers, and employers should move towards a patient-centric approach that optimizes value for patients. According to Porter, "value for patients should be the overarching principle for our broken system." Since 2006, Professor Porter, accompanied by his esteemed Harvard colleague, Profesor Robert Kaplan, have worked tirelessly to promote this new approach and pilot it with leading healthcare delivery organizations like Cleveland Clinic, Mayo Clinic, MD Anderson, and U.S. Department of Veteran Affairs. Given the current state of global healthcare, there is urgency to achieve widespread adoption of this new approach. The intent of this book is to equip all healthcare delivery organizations with a guide for putting the value-based concept into practice.

This book defines the practice of value-based health care as Value Management. The book explores Profesor Porter’s Value Equation (Value = Outcomes/ Cost), which is central to Value Management, and provides a step-by-step process for how to calculate the components of this equation. On the outcomes side, the book presents the Value Realization Framework, which translates organizational mission and strategy into a comprehensive set of performance measures and contextualizes the measures for healthcare delivery. The Value Realization Framework is based on Professor Kaplan's ground-breaking Balanced Scorecard approach, but specific to healthcare organizations. On the costs side, the book details the Harvard endorsed time-driven activity based costing (TDABC) methodology, which has proven to be a modern catalyst for defining HDO costs. Finally, this book covers the need and a plan to establish a Value Management Office to lead the delivery transformation and govern operations.

This book is designed in a format where any organization can read it and acquire the fundamentals and methodologies of Value Management. It is intended for healthcare delivery organizations in need of learning the specifics of achieving the implementation of value-based healthcare.

Table of Contents

Introduction: Putting Healthcare Value into Perspective; Chapter 1: Executive Summary; Problems facing healthcare delivery organizations; Recommendation for healthcare delivery organizations; Chapter 2: Healthcare Landscape; Global trends; Value-based trends; Summary of key points to remember; Chapter 3: How to Measure Value; Value Myths; A Healthcare Value-based balanced scorecard; Summary of key points to remember; Chapter 4: Value Management Office; The concept; Mission and vision; Role of the value management office; Governance and staffing of the value management office; Benefits of the vale management office deliverables; Management dashboards; Performance scorecards; Summary of key points to remember; Chapter 5: Value Realization Framework; Need for a framework;Value equation for healthcare; Application of the value realization framework and value equation; Summary of key points to remember; Chapter 6: Steps in the Value Realization Framework; Process overview; Step 1 – critical success factors; Step 2 – key results indicators; Step 3 – key performance indicators; Step 4 – value management; Summary of key points to remember; Chapter 7: Outcomes Metrics; Clinical outcomes; Financial outcomes; Patient satisfaction; Process improvement; Clinical satisfaction; Learning and growth; Summary of key points to remember; Chapter 8: Common Operating Picture; Getting insight from data; How does the common operating picture (COP) works?; Business analytics in healthcare; Summary of key points to remember; Chapter 9: Program Core Metrics; Program value management;  Schedule reporting metrics; Cost reporting metrics; Resources key performance indicator; Scope key performance indicator; Quality key performance indicator; Risks key performance indicator; Summary of key points to remember; Chapter 10: Technical Metrics; Technical value management; Technology process index; ISO standards for software quality; Summary of key points to remember; Chapter 11: Other Index Metrics; Other metrics; Product portfolio index; New products index; Feature function index; Time-to-market index; Research and development success index; Summary of key points to remember; Chapter 12: Change Management; Transformation process overview; Step 1: create urgency; Step 2: building guiding coalition; Step 3: form strategic vision and initiatives; Step 4: communicate the vision; Step 5: remove obstacles; Step 6: create short term wins; Step 7: build on change; Step 8: anchor the change in corporate culture; Working groups; Summary of key points to remember; Appendix 1: Acronym list; Appendix 2: SMART Criteria; Appendix 3: Value Management Meeting Template; Appendix 4: References

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Nathan Tierney began his career as a U.S. Navy Rescue Swimmer in 1993 and was awarded our nation’s highest peacetime award for Heroism for an at-sea rescue. After five years of distinguished service in the Navy, he was selected for transfer and served 14 years as a Warrant Officer in the Army, where his exceptional motivation and integrity propelled him to excellence in Special Operations. Twice nominated for White House Fellowship, he authored various policies on behalf of Veterans, and the Returning Warriors to the Workplace Initiative. His military career culminated as the Chief of Standardization and leading the technological development, implementation, marketing, and sales of a $250 million change management program for over 29,000 personnel to create a Common Operating Picture (COP), and shift the organization towards a knowledge-centric culture. The interoperable technology solution enhanced situation awareness by providing real-time personnel and equipment status, secure communication, health information and predictive modeling to improve decision-making. While serving in the military, Nathan received numerous awards for his dedication and heroism, including: Navy-Marine Corps Medal for Heroism (highest peacetime award), and White House Fellowship Nominee (2011 & 2012).

After his service in the military, he continued this record of achievement in the private sector. He has provided concrete strategies, technical metrics and advising, tactical planning, and the standardization of processes for improvement throughout the last years within various companies, including: Strategos LLC, Windhaven Insurance, and Clutch Analytics. More recently, he has further dedicated his life to those in the service, as a Director of the Office of Value Management within the U.S. Department of Veterans Affairs.

As the Director of the Office of Value Management, he leads his Value Management team to address Congressional and General Accountability Office (GAO) findings, provide governance, and measure value for VA portfolios focused on outcome-oriented results for Veterans. He is a recognized subject matter expert in Value Management and performance measurement methodologies. He also is creating this approach to healthcare within technology. His future web/ mobile application, Doc Outcomes, creates an environment in which patients can make truly informed choices about their healthcare in ways that democratize access to the best available healthcare options. The application integrates with over 291 databases to provide a "value score" based on the health outcomes achieved, and schedule an appointment. Finally there will be a place where patients can choose their providers based on how well they practice medicine.

Most recently, he has been invited to present at multiple speaking engagements, as well as earning awards for this innovative approach to healthcare. His upcoming speaking engagements include: HIMSS Population Health Forum (Boston, Feb 2017), Gartner Analytics Summit (Mar 2017), Global Predictive Analytics Summit (San Diego, Mar 2017), Frost and Sullivan (San Diego, Mar 2017), HIMSS Health IT Summit (Orlando, Apr 2017), Electronic Health Record and Health IT Summit (San Jose, Apr 2017), Data Science Summit (New York City, May 2017), Health Data Summit (Philadelphia, May 2017), and Big Data Analytics (London, Nov 2017). Over 2016 he spoke at the following: Harvard Big Innovation in Global Health (Boston, Jun 2016), Federal Interoperability Metrics Summit (Washington D.C., Aug 2016), HIMSS Federal Roundtable (Oct 2016), Innovation Enterprise Predictive Analytics Summit (Chicago, Nov 2016), and the Performance Excellence Summit (Dec 2016). He was awarded the 2016 Predictive Analytics Innovation Award for Best Use of Data for Public Good. This award recognized an individual or group who has used data to help government and public services. The Summit he attended consisted of 400+ worldwide executive leaders and innovators from industry to discuss how to leverage predictive analytics and data to drive desired business outcomes. Overall, it was an honor for him to be recognized on behalf of VA with this award, and for the votes of confidence from other leaders that Value Management provides value not just to our Veterans, but to the public. He was also recognized by Harvard Business School and selected as the Innovation Project for 2016-17.

Featured Author Profiles

Author - Nathan  Tierney

Nathan Tierney

Director of Value Management, Department of Veterans Affairs
Austin, TX, USA

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"Value. Value based care. Value optimization. Policy makers and providers alike are pressing on all fronts to drive healthcare to a better place based on "value". The risk is that value becomes a hollow, overused term with little or no quantifiable meaning. Nathan Tierney has compiled an excellent resource to help us avoid such a fate. Building upon the concept of a Value Management Office, Mr. Tierney provides us with a blueprint on how and why to create such an office, how to quantify value, and how to achieve a shared understanding and vision of what success looks like. This detailed roadmap is a must read for all in healthcare as a guide to understanding how to build value into our health delivery systems and to deliver measurable value-oriented outcomes."

-H. Stephen Lieber, President & CEO HIMSS

"Value-based health care is one of the most important concepts in health reform to emerge in the past 100 years of modern medicine. The concept, developed by Harvard Business School Professor Michael Porter, asks that the industry reshapes how it is organized and what it measures to improve outcomes and control costs. It is a concept that is embraced by patients, clinicians, administrators, and payers. While sometimes thought to be strictly conceptual, Nathan Tierney has assembled a book that takes health care organizations through a step by step process of how to create and run a value management office. He covers not only the basics of the value-based healthcare framework but addresses key issues like change and project management. This well written and concise guide will be essential for any organization embarking on a value-based health care journey."

-Dr. Thomas Feeley, MD Anderson and Senior Fellow Harvard Business School

" As healthcare organizations transition from traditional fee-for-service to value-based models of reimbursement, they’re re-engineering the way they do business. They need processes and solutions that help them define and achieve outcomes-based success. The Value Realization Framework describes the underlying principles organizations need to mark their progress. It’s another tool that can help organizations meet the operational, regulatory and quality demands of health care today and in the future.

-Paul M. Black, CEO Allscripts

"Beautiful writing!"

-Dr. Regina Herzlinger, Harvard Business School and Author of Who Killed Healthcare?

"There is no industry or business in the world that measures its services by something other than their added value. Yet, value-based healthcare delivery is a relatively new concept in the healthcare industry.

Although we have witnessed a global trend moving towards the development of value-based healthcare services, the United States is lagging behind many developed countries in this regard. The current fee-for-service model that incentivizes doctors and hospitals to increase volume and, possibly, demand for services, is perhaps one of the main causes of rising healthcare costs and the U.S. Strategies to prioritize value over volume are still in their infancy, due to many confounding factors.

In this book, Nathan Tierney has eloquently described the fundamental problem in the healthcare industry and has elegantly presented evidence-based practical algorithms and solutions to establish a value-based healthcare management plan/initiative. Any change in healthcare delivery is going to be slow, fraught with challenges. But such progress will not even begin unless all the main players, including the public, healthcare providers and legislators understand and acknowledge the need for change. "Value Management in Healthcare" is a concise, well-written book for all parties to learn about the current problem, the urgent need for change, and the potential solutions."

-Shahin Tabatabaei, MD, Director, MGH Prostate Health Program, Department of Urology, Massachusetts General Hospital 

"For hospital executives, healthcare professionals, policymakers, patient rights advocates, and anyone interested in understanding how and why outcomes must drive strategy, Nathan’s book has it all. With most comprehensive coverage and detailed examples of outcomes based value creation, it is a handbook to design and implement transformational programs. A thorough guide to truly understand what healthcare is all about - a must-read for leaders who sincerely want to make a change."

-Al Naqvi, President of American Institute of Artificial Intelligence, Professor, Formerly CFO of Illinois Health and Science healthcare system

"Whenever thinking of innovation in healthcare - whether you are in public or private hospital, whether you consider radical or gradual change, whether you work for pharmaceutical company or digital healthcare startup, and whatever healthcare policy your nation has – you may find yourself facing the fact that ‘Value-based healthcare’ is the key to solve your problem. If you need a comprehensive guide to tackle your own issue, this book is the one you are finding. Nathan made outstanding efforts on this book to provide practical tips and insights based on his learning and experiences as a healthcare innovator."

-Charles (Dong Cheol) Kim, Chief of Future Insights and Strategy, Samsung Life Public Welfare Foundation, Samsung Medical Center

"This book presents an evidence, value based decision making philosophy sorely lacking in today's antiquated medical system. This book should be required reading for all legislators, presidents, hospital CEOs and administrators. Timely and relevant to today's healthcare dilemmas." 

-Fernando Burstein MD,FACS,FAAP, Clinical Professor Plastic and Reconstructive Surgery, Emory University, Director of  Craniofacial Surgery Children's healthcare of Atlanta    

"Nathan has drawn on his diverse and sometimes intense life experiences to successfully develop a resource for all health organisations to use when implementing a value driven approach to health care.

Whether a commissioner or a provider of health care, the value based healthcare approach enables organisations to frame their strategic, tactical and operational response to better deliver outcomes that really matter to patients and the population served.

Nathan describes, in a very practical and ‘real’ way, the journey from theory through to practice for organisations wishing to embrace a value and outcomes based system of healthcare. Change management is the key, influencing and convincing the most important professionals in any healthcare system is critical to successfully changing an organisations culture and mind set. Who can argue with improving value and outcomes for the people we treat?

From a financial perspective better outcomes and leaner patient pathways equals higher efficiency and less wastage – music to my ears!

I foresee this being a key reference document to support the Harvard approach to healthcare improvement, certainly a publication I will be recommending to colleagues in Wales and the UK."

-Rob Holcombe, MSc, FCCA, Assistant Finance Director, Aneurin Bevan University Health Board, Wales, UK

"As a public health physician practicing in one of the African countries, I can dispassionately say that Nathan Tierney in this book has instilled a new vitality into health care management by translating this day to day discussion into a compelling intriguing read, applicable to both the realities of today and the future of implementing value management in health care. His descriptions which I tag 'call to action' brings forth the needed creation, management and measurement of values in health services, with incomparable concepts that improve services and create fervent customers."

-Bola I. Gobir MD. MSc. Interim Country Director (Nigeria), Assistant Professor Center for International Health, Education, and Biosecurity (CIHEB); Maryland Global Initiatives Corporation (MGIC), Institute of Human Virology University of Maryland Baltimore School of Medicine

"Healthcare is experiencing transformation across the world, from the developed markets to emerging markets. The core concept is how to deliver value, better clinical results, more cost effectiveness and shareholders’ value through industry innovation. Nathan Tierney’s book just provides health care industry a valuable guide on value-based analysis from health care provider’s point of view, not just concept but real practice. The knowledge within the book will be indispensable for health care industry to innovate and help more patients."

-George Wang, MBA, General Manager of Cardiovascular and Specialty Solutions Group, Johnson and Johnson Medical China

"We humans usually struggle wrapping our heads around the abstract concept of "value", regardless the domain. Measuring it, often times seems some sort of a subjective exercise. When we talk health, it´s even more difficult to measure it, though we all know very well, we feel it in our pockets and hearts, when we or our loved ones are receiving a valuable treatment. That´s precisely why it is so important for patients and healthcare professionals alike to measure it and create a culture around it.

The value based health care delivery paradigm has been around for a while, but it is through rigorous and experience-based books like the one in your hands that organizations of all kinds are actually able to make a successful transition into this new world.

Nathan Tierney´s work, product of his non paralleled experience in an organization that sets the pace for the rest of us and his contagious passion for the subject, is at the same time a pragmatic and very useful toolset and a roadmap to successfully lead your organization to embracing value."  

-Rafael Garrido Rivas, Managing Partner everis USA, an NTT Data Company

"Nathan Tierney has developed a much needed, comprehensive, and multi-dimensional framework for healthcare professionals who are interested in improving the value of their outcomes … The complexity of connecting operational performance measures (CSF, KPI and KRIs) of initiatives with strategic business objectives is exchanged with clarity …  Read this book - and learn from one of the best."

-Dr. Ajay Asthana, President, Pretium Analytics.

"Nathan’s book is a beautiful dance of countermeasures, root cause, and the required processes to ensure optimal outcomes for all involved. Critical Success Factors (CSF) will always remind me of those good ole days when I used to hold my breath while performing a difficult spinal tap in the ER at 3am. Transforming complex healthcare industry can now begin with this must read where true value based healthcare can drive better outcomes for the patients efficiently."

-Sonya Kim, MD, MBA, CEO & Founder , One Caring Team.

"Nathan Tierney addresses perhaps the most pressing issue in American healthcare today – the universal need to align management techniques with health outcomes. In what should be required reading for experts and those just beginning the journey that is value-based healthcare, he presents a step-by-step guide to implementing the change needed to succeed, in a reference that can be returned to again and again.  From outlining the fundamental shift required for organizations to compete in today’s healthcare environment, to presenting key measurements of progression and success, Tierney has produced an accessible guide to how a value management office can be set up for success."

-Niall Wallace, CEO Infonaut Inc.

"A Veteran, Nathan Tierney has combined his passion for this country and the system that cares for her Veterans, drawing from an unmatched fund of knowledge, skills, and experience in information technology, analytics, and business acumen to create a portrait of value that is founded upon the dignity of the individual. With our rising health care costs, nearing 20% of the Gross Domestic Product, organizations must come to terms with the economic implications of not immediately reigning in wasteful spending that inversely affects the triple aim, creating a triple threat: worse economic health, poor population and personal health, and reckless care. Tierney’s Value Management in Healthcare eradicates this triple threat through a clear and precise approach that any health care organization can adopt. Built on the seminal treatise by Porter and Teisberg  that refocused the trajectory U.S. health care system from supply centric transactional outcomes to consumer-driven and value-based patient-centered outcomes that matter, Tierney synthesizes the best tools in competitive strategy and operations management, such as the balanced scorecard, developed by Robert Kaplan, into an executable framework for all health care organizations to measure and deliver value that respects and reconciles the limited resources that are required to achieve the best outcomes for patients, in a replicable and scalable framework that not only thrives within the digital age driven by big data, but also fosters a Learning Health System built on a virtuous cycle of continuous improvement sustained on a platform of better health and better care, while balanced upon stewardship of resources. Not only is it imperative that health care organizations implement an executable value management framework to enhance operational efficiency and alignment with patient outcomes, but our nation and children depend upon it. Value Management in Healthcare will provide the blueprint and charter for health care organizations as they navigate the era of value-based care."

-David Massaro, MD, Deputy Chief Medical Officer VISN 9, U.S. Department of Veterans Affairs

"Value Management in Healthcare by Nathan W. Tierney, outlines how Healthcare Delivery Organizations (HDOs) apply Value Management methodologies in order to revive their processes. Currently, the health care structure is failing all patients, providers, and payers due to the zero-sum competition design. everis has been a leader and champion for Value Management within healthcare systems and is very proud to be a contributor to this awesome book. The efforts promoted through the book have already been nationally recognized. On November 30th, 2016, Nathan and the everis team won an award at the Predictive Analytics Summit in Chicago for ‘Best Use of Data for a Public Good’. This award was presented to the group who has ‘used data to help government and services solve society’s biggest problems’. 

Everis focuses on the patient, and more specifically the patient’s Value, as the center of the HDO’s establishment. Stemming from their expertise with Value Management, everis has recently ventured into Digital Transformation for hospitals. Digital Transformation within healthcare involves the creation of new solutions which can easily be adopted, and therefore information and data is turned into shared knowledge. Overall, a higher patient’s Value, equal to Outcomes over Costs, is achieved through everis’ continued patient-centric mission. Both Value Management and Digital Transformation can be utilized to best fulfill better outcomes and lower costs for any hospital."

-Mario Chao, ehCOS CEO

"Every CEO and senior executive whose successful tenure depends on achieving digital transformation of their business units should read this book and know how to stand up a value management office to achieve outcomes-oriented results and delivering measurable value from information technology efforts.  Every CIO and IT executive whose success and longevity as a leader depends on enhancing their strategic role and engaging with business line sponsors should follow the value management approach outlined in this book. Every healthcare leader who is accountable for outcomes and results for their organization’s clinical and IT performance and whose standing depends on happy, engaged clinicians and patients should understand the importance of the value management in asking the right questions and demanding good performance from their information technology partners and suppliers.

Nathan Tierney has incorporated practical, scalable management tools based on lessons learned leading the value management office at the Veterans Health Administration and for the Department of Veteran’s Affairs. Included are excellent use cases and evidence-based results from real-world projects on local, regional, and national levels of implementation, as well as projects that span the focus from clinical transformation to information technology implementation. The tools and methods are easy to follow and practical to implement but incorporate very insightful and impactful ideas on how digital, data, and information technologies can transform business outcomes for an enterprise in a predictable way. For IT teams, using the value management office approach can help bridge the expectations gap between promise and performance to achieve lasting strategic impact and directly beneficial outcomes for customers, vendors, and end-user alike."

-Aneel Advani, MD, Assoc Prof (Adj), Johns Hopkins and former CMIO Indian Health Service, Associate Director for Technology, CDC

"Nathan Tierney’s powerful storytelling is rarely seen in today’s health care business environment. We must redesign the health care delivery system---a team sport in service of patients, hold it accountable with measurement to improve outcomes, and quantify the resource costs over the full cycle of care. Value-based health care is a framework through which these goals are achieved, and Tierney provides a detailed playbook to get your organization there. Outlined in incredible detail and clarity, he presents core concepts and dives into the key metrics needed to build, maintain, and scale a successful value-based health care organization. Nathan shares a realistic vision of what any CEO should expect when developing their own Value Management Office. Nothing is more important to me than improving the lives of those I love. My personal mission is to create systemic change with an impact on the global stage. This playbook needs to be on the desk of every executive, clinician, and patient today."  

-Mahek Shah, MD, Senior Researcher and Senior Project Leader, Harvard Business School