credit: cleveland clinic
Harvard Business Review
Michael Porter and Thomas Lee
October 2013
This is an excerpt of the paper: “The Strategy That Will Fix Health Care“, published in 2013, focused on the topic above.
The Value Agenda Detailed
- IPUs — Organize into Integrated Practice Units (IPUs)
- OUTCOMES & COSTS — Measure Outcomes and Costs for Every Patient
- BUNDLED PAYMENTS — Move to Bundled Payments for Care Cycles
- INTEGRATED CARE — -Integrate Care Delivery Systems
- GEOGRAPHY — Expand Geographic Reach
- IT PLATFORM — Build an Enabling Information Technology Platform
5: Expand Geographic Reach
Health care delivery remains heavily local, and even academic medical centers primarily serve their immediate geographic areas. If value is to be substantially increased on a large scale, however, superior providers for particular medical conditions need to serve far more patients and extend their reach through the strategic expansion of excellent IPUs. Buying full-service hospitals or practices in new geographic areas is rarely the answer. Geographic expansion should focus on improving value, not just increasing volume.
Targeted geographic expansion by leading providers is rapidly increasing, with dozens of organizations such as Vanderbilt, Texas Children’s, Children’s Hospital of Philadelphia, MD Anderson Cancer Center, and many others taking bold steps to serve patients over a wide geographic area.
Geographic expansion takes two principle forms. The first is a hub-and-spoke model. For each IPU, satellite facilities are established and staffed at least partly by clinicians and other personnel employed by the parent organization. In the most effective models, some clinicians rotate among locations, which helps staff members across all facilities feel they are part of the team. As expansion moves to an entirely new region, a new IPU hub is built or acquired.
Patients often get their initial evaluation and development of a treatment plan at the hub, but some or much care takes place at more-convenient (and cost-effective) locations. Satellites deliver less complicated care, with complex cases referred to the hub. If complications occur whose effective management is beyond the ability of the satellite facility, the patient’s care is transferred to the hub. The net result is a substantial increase in the number of patients an excellent IPU can serve.
This model is becoming more common among leading cancer centers. MD Anderson, for example, has four satellite sites in the greater Houston region where patients receive chemotherapy, radiation therapy, and, more recently, low-complexity surgery, under the supervision of a hub IPU. The cost of care at the regional facilities is estimated to be about one-third less than comparable care at the main facility. By 2012, 22% of radiation treatment and 15% of all chemotherapy treatment were performed at regional sites, along with about 5% of surgery. Senior management estimates that 50% of comparable care currently still performed at the hub could move to satellite sites-a significant untapped value opportunity.
The second emerging geographic expansion model is clinical affiliation, in which an IPU partners with community providers or other local organizations, using their facilities rather than adding capacity. The IPU provides management oversight for clinical care, and some clinical staff members working at the affiliate may be employed by the parent IPU. MD Anderson uses this approach in its partnership with Banner Phoenix. Hybrid models include the approach taken by MD Anderson in its regional satellite program, which leases outpatient facilities located on community hospital campuses and utilizes those hospitals’ operating rooms and other inpatient and ancillary services as needed.
Local affiliates benefit from the expertise, experience, and reputation of the parent IPU-benefits that often improve their market share locally. The IPU broadens its regional reach and brand, and benefits from management fees, shared revenue or joint venture income, and referrals of complex cases.
The Cleveland Clinic’s Heart and Vascular Institute, a pioneering IPU in cardiac and vascular care, has 19 hospital affiliates spanning the Eastern seaboard. Successful clinical affiliations such as these are robust-not simply storefronts with new signage and marketing campaigns-and involve close oversight by physician and nurse leaders from the parent organization as well as strict adherence to its practice models and measurement systems. Over time, outcomes for standard cases at the Clinic’s affiliates have risen to approach its own outcomes.
Vanderbilt’s rapidly expanding affiliate network illustrates the numerous opportunities that arise from affiliations that recognize each partner’s areas of strength. For example, Vanderbilt has encouraged affiliates to grow noncomplex obstetrics services that once might have taken place at the academic medical center, while affiliates have joint ventured with Vanderbilt in providing care for some complex conditions in their territories.
About the authors
Michael E. Porter, is the Bishop Lawrence University Professor at Harvard University. He is based at Harvard Business School.
Thomas H. Lee, is the chief medical officer at Press Ganey and the former network president of Partners HealthCare
A version of this article appeared in the October 2013 issue of Harvard Business Review.
Originally published at https://hbr.org on October 1, 2013.
