IBM Global Business Services HealthcareWhite PaperRedefining Value in Healthcare:Innovating to expand access,improve quality and reduce costs of care
2 Redefining Value in Healthcare: Innovating to expand access, improve quality and reduce costs of careThe growing prevalence of chronic diseases and agingpopulations around the globe are placing a heavy two-pronged burden on health systems.It’s no wonder that healthcare costs continue to rise rapidly and relentlessly worldwide.France spent 11 percent of its GDP on healthcare in 2008, up from 10 percent in 2000;the U.K. spent 8.7 percent, up from 7; Japan spent 8.3 percent, up from 7.7 percent. TheUnited States spends far more on healthcare than any other nation. In 2009, healthcarecosts reached US$2.5 trillion – more than US$8,000 per person and 17 percent of GDP,up from 13.4 percent in 2000. Yet as is widely cited in healthcare reform debates, the U.S.fails to achieve optimum outcomes, lagging some other industrialized countries incommon measures of healthcare performance.Despite its increased spending, the U.S. healthcare industry emerging technologies with the potential to achieve the threestruggles to deliver the right care, to the right patients, at the most critical objectives:right time. More than 46 million Americans have no healthinsurance, and the year-old Affordable Care Act will not be in • Increase consumer access and valuefull effect until 2014. And even with its mandates and • Collaborate to improve quality, outcomes, andincentives aimed at adding millions to the health insurance personalized carerolls, critics insist that there’s little in the sweeping overhaul to • Build sustainable, cost efficient healthcare systemstruly rein in costs and improve patient care. And the U.S. isonly one case in a global challenge; The Organization for Yet to the extent many healthcare systems remain fragmented,Economic Co-operation and Development (OECD) projects it may be the impetus of consumers – who experience thethat Europe’s healthcare systems require spending increases comfort, cost advantages and improvements in care – thatthat outstrip economic growth.1 ultimately drives wider adoption of integrated healthcare technology.Increasingly, however, healthcare is turning to digitalinformation and electronic resources to mimic other industries Increasing consumer access and valuethat routinely innovate to improve quality while Improving access to healthcare is critical in the U.S. butsimultaneously reducing costs. Electronic medical records greater access is also a global necessity. Even countries like(EMRs), digital communication between patients and Canada and Norway, with healthcare systems generallyphysicians, web-based health information accessible to both considered among the world’s most comprehensive, areclinicians and patients, and even remote diagnosis, treatment, challenged to deliver care to citizens in geographically remotecare and patient education are just examples of rapidly regions. China, India and other newly industrialized countries with large populations and vast geographies confront these challenges on a significant scale.
IBM Global Business Services 3In its most recent World Health Report, the World Health Crucial to the success of these telehealth efforts will be:Organization (WHO) identified inefficient and inequitable useof resources as among the three key impediments to universal 1. Substantial improvements in the patient experience.access to healthcare.2 It conservatively estimated that Seamless and un-obtrusive connections between patientsinefficiency wastes between 20 to 40 percent of all health and healthcare professionals (doctors, nurses, pharmacists,spending – wasted resources that could be redirected towards etc.) for more convenient and personalized care experiencesachieving universal coverage. The situation in the U.S. is no – without sacrificing patient privacy.better, where an estimated US$700 billion a year in healthcarecosts do not improve health outcomes.3 Administrative system 2. Buy-in from physicians and other healthcare professionals,inefficiencies waste an estimated US$100-150 billion annually, who must see the technology as facilitating their daily workprovider inefficiency and errors waste another US$75-100 rather than establishing additional workload. Data inputbillion each year, and failure to coordinate care burns US$25- into such systems must be minimized and simplified, while50 billion annually.4 transactional activities like billing and scheduling are handled efficiently in the background.Opportunities to expand access to healthcare with the sameresources exist in all countries. Medicines account for three of 3. Quality and outcome improvements that provide real valuethe 10 most common causes of inefficiency, according to the which can be measured and shared with providers, payersWHO. Reducing unnecessary expenditure on medicines and and patients, alike. Prompt reimbursements and additionalusing them more appropriately, and improving quality control, incentives for offering new telehealth services should becould save countries up to 5 percent of their health established based on measured quality and costexpenditure.5 Among the other common sources of inefficiency improvements.are medical errors – getting care right the first time savesmoney – and failure to get the most out of technologies andhealth services, according to the WHO. Case Study: A University hospital in ChinaWringing process inefficiencies from the system can help A University hospital system in a major Chinese city workedfinance broader access to healthcare, but technology is needed with IBM Research and IBM Global Business Services to implement a community-wide electronic healthcare recordto overcome geography in making the most efficient use of system and diagnostic, treatment and monitoring tools tomedical resources. Sophisticated communications and improve the access to patients with chronic conditions andbiomedical telemonitoring technology are helping providers diseases. The system helps the hospital provide moredeliver medical services across increasingly vast distances and responsive, proactive care to patients with chronic conditions such as diabetes and high blood pressure. Biomedical sensorsleverage scarce medical specialties to patients who need them. collect data on a patient’s health conditions and other vitalSuch systems can also be used to deliver comprehensive signs, correlating it with the patient data and reporting ithealthcare to patients and consumers at home rather than the automatically over a variety of networks to the appropriate clinical supporting systems at major hospitals for furthertraditional office or hospital visit, greatly expanding access to treatment. The solution is expected to bring about manyhealthcare. benefits to the hospital: cost reduction in chronic disease treatment, time savings in patient referral, the ability to serve more patients and help doctors work more efficiently. But above all, it will help them provide better care to patients.
4 Redefining Value in Healthcare: Innovating to expand access, improve quality and reduce costs of careCollaborating to improve quality and outcomes to deliver The Diabetes Connect program, until recently, involved amore personalized care device that took glucometer readings and transmitted the dataEliminating waste and inefficiencies in healthcare delivery is over phone lines to a database. Yet a “disappointingly highone key to expanding access, yet it also promises to improve percentage” of patients were unwilling to take the step ofthe quality of care and patient outcomes. Specifically, use of plugging in a device to the glucometer and into the phone line,information and communication technologies – including then pushing a single button to upload glucose readings,access to timely, comprehensive digital health information and according to Joseph C. Kvedar, MD Director of the Center formedical records – enables a more collaborative approach to Connected Health.8care that promises better results. Giving people specific, detailed information about their healthSuch is the case in Spain, where the regional health authority, can allow them to see a path toward healthier behavior,Ib-Salud, launched its Balearic Telestroke program in 2006. It according to Thomas Goetz, executive editor of Wireduses advanced video-imaging technologies, broadband magazine and author of “The Decision Tree: Taking Controlnetworks and electronic health records (EHRs) to allow of Your Health in the New Era of Personalized Medicine”neurologists in the capital city, Palma, to provide time- (Rodale Books, 2010). The best way to give people specificsensitive, life-saving stroke care across the remote islands in information and get them on a healthier path, Goetz says, is tothe Balearic archipelago. Patients who received telestroke make the information simple to understand, as the magazinetreatment between July 2006 and November 2008 had three did in its December issue with a radical redesign of a blood testmonth post-stroke cure rates of 55 percent, comparable to the report for the article “The Blood Test Gets a Makeover.”959 percent cure rate for patients receiving face-to-face care.6Boston’s Center for Connected Health operates programs forheart failure, hypertension, diabetes and other chronic Case Study: A medical device manufacturerconditions, as well as online second opinions and enhanced A major medical device manufacturer gains a competitive advantage and provides revolutionary improvements to cardiacmedical education and training. Connected Cardiac Care, a patients through remote patient care. IBM Global Businesshome telemonitoring and education program for heart failure Services was their innovation partner engaged in the design,patients at risk for hospitalization, dropped re-admissions by development, and implementation of this solution. The secure, Internet-based system for patients with implanted medicalnearly 50 percent.7 Similar results are evident in both its devices gathers and stores data from the implant procedure,Diabetes Connect and Blood Pressure Connect self- in-clinic follow-up visits and from remote transmissions sentmanagement programs. from a patient’s home. The information from the device helps physicians enhance patient care while improving administrative efficiency. Patients no longer need to return to the physician’sSuch self-management programs encourage patients to take a office unless there is a problem identified by the device. Thismore proactive role in their own care. They typically yield frees up valuable physician time that can now be better spentbetter maintenance of treatment plans and healthier lifestyle dealing with critical patient needs. Also, it allows data to be integrated from the remote care system into a patient’schoices. But such systems need to be unobtrusive, user-friendly electronic health record.and comfortable for patients.
IBM Global Business Services 5Even more pronounced results are evident when empowering The goal is to use analytics to rapidly generate new clinicalnot just the patient, but the entire spectrum of practitioners knowledge – leveraging existing clinical experiences andinvolved in a patient’s care, a practice known as coordinated outcomes. Managing that knowledge and incorporating it intocare. Rather than focusing on single episodes of treatment, clinical processes and workflows is key, whether it involvesthese coordinated “care teams” take a more comprehensive patients communicating with their care delivery teams,approach, moving healthcare beyond the doctor’s office or collaboration among healthcare providers or medicalhospital and into the daily lives of patients. Such integrated researchers working across organizational, industry or countrycare offers patients higher-quality, more efficient care that boundaries.better meets their needs, often at a lower cost. And newtelehealth services can prove to be key enablers of such a Expanding access to healthcare and improving quality of carecollaborative approach to healthcare. would be impossible without simultaneously reining in costs. Even before the economic downturn in 2008, total spendingReducing costs through analytics on healthcare in all OECD countries was rising faster thanThe vast volumes of integrated patient information generated economic growth. The average ratio of health spending toby increasingly instrumented and coordinated care teams could GDP went from 7.8 percent in 2000 to 9.0 percent in 2008.10hold the key to more complete clinical knowledge. Yet the efficiencies gained from coordinated care, telehealth, medical analytics and other technology-enabled advances areIncreasingly – but not yet on a wide scale – standards-based the keys to getting spiraling costs under control.medical networks are capable of capturing, storing, analyzing,appropriately sharing and presenting information aboutindividual patients and patient populations. For example, Case Study: A healthcare provider in Spainapplying advanced analytics innovation from IBM Research to In Spain, the largest healthcare provider in the state ofhelp identify and compare individual patients with cohorts of Catalonia has saved €45 million over three years through asimilar cases could assist physicians in predicting future modernization program that uses advanced video-imaging technologies, broadband networks and electronic healthoutcomes and deciding on a course of treatment. records to allow professionals all around the region share patient data, provide time-sensitive care and improve patientWatson, named after IBM founder Thomas J. Watson, was experience in the delivery of care. The ability to connectbuilt by a team of IBM scientists who set out to accomplish a primary care physicians to hospital professionals has significantly reduced waiting time for patients to see certaingrand challenge – build a computing system with the ability to specialists. Letting all hospitals in the network share the sameunderstand the meaning and context of human language, patient data has put the patient in the center of the healthcarerapidly process information to find precise answers to complex process, eliminated duplicated tests, reduced unnecessary hospital displacements and allows for faster response inquestions, and create confidence in the response it uncovers. emergency situations.With its combination of sheer data processing power, naturallanguage recognition and machine learning, the system holdsenormous potential to transform how computers helporganizations, and particularly healthcare, accomplish onceunobtainable outcomes in real time.
6 Redefining Value in Healthcare: Innovating to expand access, improve quality and reduce costs of careAn experimental program, called The Camden Coalition, Yet progress continues and must accelerate in the face of risingapplied aggressive collaborative and preventative care to the healthcare costs and the global debt crisis. We must leveragemost costly patients in one of the poorest cities in the U.S., technology to focus on substantially improving the healthCamden, NJ, to show remarkable preliminary results. An consumers’ experience in receiving healthcare services withoutanalysis of hospital claims data from all three Camden health putting additional burden on healthcare professionals. It is thesystems (Cooper University Hospital, Our Lady of Lourdes resulting push from the health consumers asking for theseMedical Center, and Virtua Health), discovered that 80 percent technology-enabled services which will build the momentumof the costs were spent on 13 percent of the patients, and 90 for change. Building more open, interoperable and robustpercent of the costs were spent on 20 percent of the patients. health information technology environments is the key toThe first 36 “super-utilizers” – patients with various expanding access, improving care and reducing healthcarecombinations of asthma, cancer, diabetes, drug addiction, costs.emphysema, heart disease, mental illness, obesity, and otherhealth problems – averaged 62 hospital and E.R. visits per For more informationmonth before joining the program that provided For more information, please visit ibm.com/healthcarecomprehensive collaborative care. The treatment programreduced their hospital visits by 40 percent, cutting theirhospital bills, previously averaging US$1.2 million per month,to just over US$500,000 monthly – a 56 percent drop.11Building sustainable healthcare systemsWhile the potential gains from greater use of theseinformation technologies have been evident for years and aredemonstrable in isolated examples, most countries still facemajor adoption challenges. Information technologydeployment in the healthcare industries lags many other partsof the economy.Obstacles include the cultural barriers to sharing patientrecords and integrating workflows across specialties andin-patient and out-patient settings. Healthcare professionalsare sometimes reticent to adopt new technologies because ofcomplicated user experiences and additional workload with noclear and measurable value, lack of transparency about cost andquality impacts of working collaboratively in adherence toaccepted guidelines and ongoing privacy concerns. Privacy andsocietal issues arising from the increasing use of genomic datain designing and directing treatment strategies will be anotherfuture challenge.
7 Redefining Value in Healthcare: Innovating to expand access, improve quality and reduce costs of careAbout the author ReferencesMohammad Naraghi (MD, PhD) is the Global Leader for both 1 Organisation for Economic Co-operation and Development (OECD), “Growing health spending puts pressure on government budgets, according to OECDthe Healthcare and Life Sciences Industries for IBM Global Health Data 2010,” June 29, 2010. http://www.oecd.org/document/11/0,3343,Business Services. In this capacity, he is in charge of developing en_2649_34631_45549771_1_1_1_37407,00.htmlthe vision, strategy and global business in Healthcare and LifeSciences by building and expanding IBM’s offerings and 2 “The world health report - Health systems financing: the path to universal coverage.” The World Health Organization, November 2010. http://www.who.relationships with the clients. int/whr/2010/en/index.htmlHe has rich experience in the Healthcare and Life Sciences 3 “Budget Chief: For Healthcare, More Is Not Better.” Peter Orszag, director ofindustries for 20 years, ranging from clinical practice in the White House Office of Management and Budget, during an interview on National Public Radio. April 16, 2009. http://www.npr.org/templates/story/story.cardiology and biomedical R&D work at leading edge php?storyId=103153156institutions in Europe and USA to executive leadershippositions in world-renowned international corporations, such 4 Kelley, Robert. “Where can $700 billion in waste be cut annually from the U.S.as Siemens AG and McKinsey & Company. healthcare system?” Thomson Reuters. October 2009. http://www.ncrponline. org/PDFs/Thomson_Reuters_White_Paper_on_Healthcare_Waste.pdfHe studied Medicine and Mathematics in Germany and 5 “The world health report - Health systems financing: the path to universalAustria. After clinical work in cardiology, he moved to coverage.” The World Health Organization, November 2010.California Institute of Technology for graduate studies in http://www.who.int/whr/2010/en/index.htmlComputation and Neural Systems. Returning back toGermany, he finished his PhD in Physiology and Biophysics 6 “Improving Health Sector Efficiency: The Role of Information and Communication Technologies,” OECD Health Policy Studies, OECD, Paris. Junefrom the Max-Planck-Institute. He then joined McKinsey & 2010. www.oecd.org/health/ictCompany to consult global Healthcare and Life Sciencesclients and moved on to Siemens Healthcare. At Siemens 7 The Center for Connected Health, Boston, MA. http://connected-health.org/Healthcare, he was a member of the Global ExecutiveCommittee in charge of Global Business Development and 8 Joseph C. Kvedar, MD, “From Couch Potato to Quantified Self: This Journey Must be Defined and Encouraged,” The cHealth Blog, June 13, 2011. http://CEO of Siemens Diagnostics. Dr. Naraghi can be reached at email@example.com. self-this-journey-must-be-defined-and-encouraged/ 9 Steven Leckart, “The Blood Test Gets a Makeover,” Wired magazine, December 2010. 10 Organisation for Economic Co-operation and Development (OECD), “Growing health spending puts pressure on government budgets, according to OECD Health Data 2010,” June 29, 2010. http://www.oecd.org/document/11/0,3343, en_2649_34631_45549771_1_1_1_37407,00.html 11 Atul Gawande, “The Hot Spotters – Can we lower medical costs by giving the neediest patients better care?” The New Yorker, January 24, 2011. http://www. newyorker.com/reporting/2011/01/24/110124fa_fact_gawande#ixzz1NsvfWj6g