IBM Global Business Services Healthcare
Redefining 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 care
The growing prevalence of chronic diseases and aging
populations 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. The
United States spends far more on healthcare than any other nation. In 2009, healthcare
costs 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 in
common measures of healthcare performance.
Despite its increased spending, the U.S. healthcare industry emerging technologies with the potential to achieve the three
struggles to deliver the right care, to the right patients, at the most critical objectives:
right time. More than 46 million Americans have no health
insurance, and the year-old Affordable Care Act will not be in • Increase consumer access and value
full effect until 2014. And even with its mandates and • Collaborate to improve quality, outcomes, and
incentives aimed at adding millions to the health insurance personalized care
rolls, critics insist that there’s little in the sweeping overhaul to • Build sustainable, cost efficient healthcare systems
truly rein in costs and improve patient care. And the U.S. is
only 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 the
that Europe’s healthcare systems require spending increases comfort, cost advantages and improvements in care – that
that outstrip economic growth.1 ultimately drives wider adoption of integrated healthcare
Increasingly, however, healthcare is turning to digital
information and electronic resources to mimic other industries Increasing consumer access and value
that routinely innovate to improve quality while Improving access to healthcare is critical in the U.S. but
simultaneously 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 generally
physicians, web-based health information accessible to both considered among the world’s most comprehensive, are
clinicians and patients, and even remote diagnosis, treatment, challenged to deliver care to citizens in geographically remote
care 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 3
In 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 use
of 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 patients
inefficiency 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 experiences
achieving universal coverage. The situation in the U.S. is no – without sacrificing patient privacy.
better, where an estimated US$700 billion a year in healthcare
costs 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 work
provider inefficiency and errors waste another US$75-100 rather than establishing additional workload. Data input
billion each year, and failure to coordinate care burns US$25- into such systems must be minimized and simplified, while
50 billion annually.4 transactional activities like billing and scheduling are
handled efficiently in the background.
Opportunities to expand access to healthcare with the same
resources exist in all countries. Medicines account for three of 3. Quality and outcome improvements that provide real value
the 10 most common causes of inefficiency, according to the which can be measured and shared with providers, payers
WHO. Reducing unnecessary expenditure on medicines and and patients, alike. Prompt reimbursements and additional
using them more appropriately, and improving quality control, incentives for offering new telehealth services should be
could save countries up to 5 percent of their health established based on measured quality and cost
expenditure.5 Among the other common sources of inefficiency improvements.
are medical errors – getting care right the first time saves
money – and failure to get the most out of technologies and
health services, according to the WHO.
Case Study: A University hospital in China
Wringing process inefficiencies from the system can help A University hospital system in a major Chinese city worked
finance broader access to healthcare, but technology is needed with IBM Research and IBM Global Business Services to
implement a community-wide electronic healthcare record
to overcome geography in making the most efficient use of
system and diagnostic, treatment and monitoring tools to
medical resources. Sophisticated communications and improve the access to patients with chronic conditions and
biomedical telemonitoring technology are helping providers diseases. The system helps the hospital provide more
deliver medical services across increasingly vast distances and responsive, proactive care to patients with chronic conditions
such as diabetes and high blood pressure. Biomedical sensors
leverage scarce medical specialties to patients who need them. collect data on a patient’s health conditions and other vital
Such systems can also be used to deliver comprehensive signs, correlating it with the patient data and reporting it
healthcare 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 further
traditional office or hospital visit, greatly expanding access to treatment. The solution is expected to bring about many
healthcare. 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 care
Collaborating to improve quality and outcomes to deliver The Diabetes Connect program, until recently, involved a
more personalized care device that took glucometer readings and transmitted the data
Eliminating waste and inefficiencies in healthcare delivery is over phone lines to a database. Yet a “disappointingly high
one key to expanding access, yet it also promises to improve percentage” of patients were unwilling to take the step of
the 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 for
medical records – enables a more collaborative approach to Connected Health.8
care that promises better results.
Giving people specific, detailed information about their health
Such 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 Wired
uses advanced video-imaging technologies, broadband magazine and author of “The Decision Tree: Taking Control
networks 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 specific
sensitive, life-saving stroke care across the remote islands in information and get them on a healthier path, Goetz says, is to
the Balearic archipelago. Patients who received telestroke make the information simple to understand, as the magazine
treatment between July 2006 and November 2008 had three did in its December issue with a radical redesign of a blood test
month post-stroke cure rates of 55 percent, comparable to the report for the article “The Blood Test Gets a Makeover.”9
59 percent cure rate for patients receiving face-to-face care.6
Boston’s Center for Connected Health operates programs for
heart failure, hypertension, diabetes and other chronic Case Study: A medical device manufacturer
conditions, as well as online second opinions and enhanced A major medical device manufacturer gains a competitive
advantage and provides revolutionary improvements to cardiac
medical education and training. Connected Cardiac Care, a patients through remote patient care. IBM Global Business
home 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 medical
nearly 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 sent
management 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’s
Such self-management programs encourage patients to take a office unless there is a problem identified by the device. This
more proactive role in their own care. They typically yield frees up valuable physician time that can now be better spent
better 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’s
choices. But such systems need to be unobtrusive, user-friendly electronic health record.
and comfortable for patients.
IBM Global Business Services 5
Even more pronounced results are evident when empowering The goal is to use analytics to rapidly generate new clinical
not just the patient, but the entire spectrum of practitioners knowledge – leveraging existing clinical experiences and
involved in a patient’s care, a practice known as coordinated outcomes. Managing that knowledge and incorporating it into
care. Rather than focusing on single episodes of treatment, clinical processes and workflows is key, whether it involves
these 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 medical
hospital and into the daily lives of patients. Such integrated researchers working across organizational, industry or country
care offers patients higher-quality, more efficient care that boundaries.
better meets their needs, often at a lower cost. And new
telehealth services can prove to be key enablers of such a Expanding access to healthcare and improving quality of care
collaborative approach to healthcare. would be impossible without simultaneously reining in costs.
Even before the economic downturn in 2008, total spending
Reducing costs through analytics on healthcare in all OECD countries was rising faster than
The vast volumes of integrated patient information generated economic growth. The average ratio of health spending to
by increasingly instrumented and coordinated care teams could GDP went from 7.8 percent in 2000 to 9.0 percent in 2008.10
hold the key to more complete clinical knowledge. Yet the efficiencies gained from coordinated care, telehealth,
medical analytics and other technology-enabled advances are
Increasingly – 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 about
individual patients and patient populations. For example,
Case Study: A healthcare provider in Spain
applying advanced analytics innovation from IBM Research to In Spain, the largest healthcare provider in the state of
help identify and compare individual patients with cohorts of Catalonia has saved €45 million over three years through a
similar cases could assist physicians in predicting future modernization program that uses advanced video-imaging
technologies, broadband networks and electronic health
outcomes and deciding on a course of treatment.
records to allow professionals all around the region share
patient data, provide time-sensitive care and improve patient
Watson, named after IBM founder Thomas J. Watson, was experience in the delivery of care. The ability to connect
built 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 certain
grand challenge – build a computing system with the ability to specialists. Letting all hospitals in the network share the same
understand the meaning and context of human language, patient data has put the patient in the center of the healthcare
rapidly process information to find precise answers to complex process, eliminated duplicated tests, reduced unnecessary
hospital displacements and allows for faster response in
questions, and create confidence in the response it uncovers. emergency situations.
With its combination of sheer data processing power, natural
language recognition and machine learning, the system holds
enormous potential to transform how computers help
organizations, and particularly healthcare, accomplish once
unobtainable outcomes in real time.
6 Redefining Value in Healthcare: Innovating to expand access, improve quality and reduce costs of care
An experimental program, called The Camden Coalition, Yet progress continues and must accelerate in the face of rising
applied aggressive collaborative and preventative care to the healthcare costs and the global debt crisis. We must leverage
most costly patients in one of the poorest cities in the U.S., technology to focus on substantially improving the health
Camden, NJ, to show remarkable preliminary results. An consumers’ experience in receiving healthcare services without
analysis of hospital claims data from all three Camden health putting additional burden on healthcare professionals. It is the
systems (Cooper University Hospital, Our Lady of Lourdes resulting push from the health consumers asking for these
Medical Center, and Virtua Health), discovered that 80 percent technology-enabled services which will build the momentum
of the costs were spent on 13 percent of the patients, and 90 for change. Building more open, interoperable and robust
percent of the costs were spent on 20 percent of the patients. health information technology environments is the key to
The first 36 “super-utilizers” – patients with various expanding access, improving care and reducing healthcare
combinations of asthma, cancer, diabetes, drug addiction, costs.
emphysema, heart disease, mental illness, obesity, and other
health problems – averaged 62 hospital and E.R. visits per For more information
month before joining the program that provided For more information, please visit ibm.com/healthcare
comprehensive collaborative care. The treatment program
reduced their hospital visits by 40 percent, cutting their
hospital bills, previously averaging US$1.2 million per month,
to just over US$500,000 monthly – a 56 percent drop.11
Building sustainable healthcare systems
While the potential gains from greater use of these
information technologies have been evident for years and are
demonstrable in isolated examples, most countries still face
major adoption challenges. Information technology
deployment in the healthcare industries lags many other parts
of the economy.
Obstacles include the cultural barriers to sharing patient
records and integrating workflows across specialties and
in-patient and out-patient settings. Healthcare professionals
are sometimes reticent to adopt new technologies because of
complicated user experiences and additional workload with no
clear and measurable value, lack of transparency about cost and
quality impacts of working collaboratively in adherence to
accepted guidelines and ongoing privacy concerns. Privacy and
societal issues arising from the increasing use of genomic data
in designing and directing treatment strategies will be another
7 Redefining Value in Healthcare: Innovating to expand access, improve quality and reduce costs of care
About the author References
Mohammad 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 OECD
the 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.html
the vision, strategy and global business in Healthcare and Life
Sciences 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.
He has rich experience in the Healthcare and Life Sciences 3 “Budget Chief: For Healthcare, More Is Not Better.” Peter Orszag, director of
industries 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
institutions in Europe and USA to executive leadership
positions 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.
He studied Medicine and Mathematics in Germany and
5 “The world health report - Health systems financing: the path to universal
Austria. 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.html
Computation and Neural Systems. Returning back to
Germany, 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. June
from the Max-Planck-Institute. He then joined McKinsey &
Company to consult global Healthcare and Life Sciences
clients 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 Executive
Committee 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
9 Steven Leckart, “The Blood Test Gets a Makeover,” Wired magazine,
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,
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.