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Thursday Review: “What Is Value in Health Care?”

I read Dr. Michael E. Porter’s article in The New England Journal of Medicine a number of years ago. At the time, I was interested in concrete ways to talk about value and effectiveness in healthcare. Rereading it now, it strikes me that Porter provides a framework not only for those ideas, but also a template for having difficult conversations with patients.

The big idea in the paper is that value boils down to a simple equation:

Value = Outcomes / Costs

A few important observations follow. “Value” has long been a buzzword. In marketing, “value” is so often repeated that it’s an almost meaningless abstraction. In medical administration, “value” has come to mean slashing expenses. Porter emphasizes that value is neither an abstract ideal nor a code word for cost reduction.

The trouble is that neither the numerator nor the denominator in the value equation are being measured in meaningful ways.

With regard to outcome, Porter emphasizes that process is not outcome:

Process measurement, though a useful internal strategy for health care institutions, is not a substitute for measuring outcomes. In any complex system, attempting to control behavior without measuring results will limit progress to incremental improvement. There is no substitute for measuring actual outcomes, whose principal purpose is not comparing providers but enabling innovations in care. Without such a feedback loop, providers lack the requisite information for learning and improving.

With regard to costs, current metrics only measure what is billed, even though current reimbursement practices are misaligned with value. Similarly, costs are measured for departments or billing units rather than for the full care cycle over which value is determined.

This definition of value is inherently patient-centered. “Efficiency” is considered in terms of the patient’s long-term health, and cutting costs is only beneficial if it doesn’t adversely affect the patient.

Value in healthcare is how well the patient’s needs are met relative to how much total money is spent on that outcome across all providers, specialists, and institutions. It’s a sobering reminder of how far patient-centered care has to go that neither of those metrics is being considered.

Measuring cost is certainly tricky based on how medical expenses are billed and reimbursed. Most of Porter’s paper, though, is centered on a way to measure outcomes. To that end, Porter has developed “The Outcome Measures Hierarchy”. There are three “tiers” to this hierarchy, which might be considered a kind of medical Maslow’s hierarchy of needs. The tiers proceed in order, from the immediate threat to health, through the recovery from that threat, on to the long-term consequences of the response to that threat:

  • Tier 1: Health status achieved [for acute illness] or retained [for chronic or degenerative illness]
  • Tier 2: Process of recovery
  • Tier 3: Sustainability of health

To these, Porter adds sub-tiers, with the most important, or at least urgent, nearest the top:

  • Tier 1: Health status achieved [for acute illness] or retained [for chronic or degenerative illness]
    • Survival
    • Degree of health or recovery [e.g., level of post-operative function or remission from cancer]
  • Tier 2: Process of recovery
    • Time to recovery and time to return to normal activities
    • Disutility of care or treatment process (e.g., diagnostic errors, ineffective care, treatment-related discomfort, complications, adverse effects)
  • Tier 3: Sustainability of health
    • Sustainability of health or recovery and nature of recurrences*
    • Long-term consequences of therapy (e.g., care-induced illnesses)*

* In Porter’s conception, Tier 3A wraps back to Tier 1 as a recurrence and Tier 3B wraps back to Tier 1 as a iatrogenic condition.

Porter gives examples of measurable outcomes for several conditions. Each medical condition … he writes, will have its own outcome measures. Measurement efforts should begin with at least one outcome dimension at each tier, and ideally one at each [of the six sub-tiers]. As experience and available data infrastructure grow, the number of dimensions (and measures) can be expanded.

This is an interesting enough idea on its own, that there is a hierarchy of needs ranging from the most immediate — survival — to the longest-term that can be measured. Reading Porter this time, though, I was struck by how useful it is to frame the hierarchy of medical interventions this way.

With some conditions, such as metastatic cancers, providers may have a limited effect on survival or other Tier 1 outcomes, but they can differentiate themselves in Tiers 2 and 3 by making care more timely, reducing discomfort, and minimizing recurrence.

Improving one outcome dimension can benefit others. For example, more timely treatment can improve recovery. However, measurement can also make explicit the tradeoffs among outcome dimensions. For example, achieving more complete recovery may require more arduous treatment or confer a higher risk of complications. Mapping these tradeoffs, and seeking ways to reduce them, is an essential part of the care-innovation process.

Providers working with Narrative Medicine often talk about soliciting the desires of the patient, and knowing how to adjust care accordingly. Here is a concrete framework for patients and providers to be able to talk about the risks and rewards of intervention and care.

As Porter wrote, specific trade-offs at specific steps in the process of care can be “mapped”, discussed, and agreed upon where previously there might have been assumptions on both sides about the next steps.

With regards to the idea of value, there’s a need to track patient outcomes and costs longitudinally. Porter’s formulation of value puts the patient at the center of the discussion about how care should be measured, delivered, tracked, and changed. In addition, Porter’s conception of tiered outcomes creates a shared vocabulary. This makes a conversation about illness, recovery, and the patient’s wishes, whether in end-of-life care or for routine matters, so much more specific and robust. Viewing the hierarchy of outcomes as a kind of template for communicating is a wonderful step in focusing healthcare on the patient.


The article reviewed: Porter, Michael E. “What Is Value in Health Care?” The New England Journal of Medicine 363, no. 27 (2010): 2477–81.

Featured Image: detail of Woman Holding a Balance, by Johannes Vermeer in the National Gallery of Art, Washington, DC. The work is in the public domain.