Redefining German Health Care (eBook)

Michael E. Porter is a leading authority on competitive strategy and the competitiveness of countries, regions, and cities, and the application of strategic principles to societal problems.  Based at Harvard Business School, his ideas and personal leadership have influenced countless governments, companies, and scholars across the globe. Professor Porter’s thinking on strategy is taught in virtually every business school in the world, and his work on competitiveness is an integral part of modern economic development theory and practice.Professor Porter’s work on health care dates back more than a decade. His seminal book, Redefining Health Care, has shaped the new field of value-based health care delivery. The book, together with a series of additional publications, is successfully inspiring change in health care providers and governments across the globe. An aerospace engineering graduate of Princeton, Professor Porter has an M.B.A. from the Harvard Business School, where he was a George F. Baker Scholar, and a Ph.D. in business economics from Harvard University. He has received numerous awards and honors, including six McKinsey Awards for the best Harvard Business Review article of the year, national honors in a number of countries, and the highest award of the Academy of Management for scholarly contributions to management. Clemens B. Guth is the CEO of two private hospitals owned by Artemed Kliniken, a German national hospital provider. In addition to hospital operations, he is responsible for M&A and quality management across Artemed. Previously Dr. Guth worked as a health care consultant for McKinsey & Company. His client work included studies for German hospital groups, statutory and private health plans as well as regional outpatient associations. Before joining McKinsey & Company, he started his professional career as a Junior Doctor at the Chelsea & Westminster Hospital in London. Dr. Guth earned an M.B.B.S. from the Imperial College Medical School, London, and an M.B.A. from Harvard Business School. He was awarded honors and prizes for both degrees. He is a scholar of the German National Academic Foundation and the German Academic Exchange Service program. For several years, Dr. Guth has published scholarly contributions on health care subjects.

Preface 5
Table of Contents 9
List of Figures 12
List of Tables 14
Introduction 15
Defining the Problem 19
High and Rising Costs 19
Declining Sustainability of the Statutory Health Plan System 22
Overcapacity and Low Reimbursement Levels 25
Increasingly Concerned Patients 28
Inconsistent Quality 29
Summary 38
Guiding Principles of a Value-Based Health Care System 39
The Fundamental Goal Is Value for Patients 40
The Most Powerful Tool for Increasing Value, and Truly Containing Costs, Is Improving Health Outcomes 43
Organizing and Integrating Care Around the Patient’s Medical Condition 44
Health Care Is Co-produced by Health Care Professionals and Patients 47
Enabling Provider Experience, Scale, and Learning at the Medical Condition Level 48
Measuring and Reporting on Outcomes and Costs for Every Patient 49
Moving to Bundled Reimbursement for Care Cycles 60
Open Patient Choice and Value-Based Competition for Patients 62
Introducing Comprehensive and Interoperable Information Systems to Enable Integrated Care Delivery and Measure Results 64
Health Plans Should Contribute to Health Value, Rather than Act as Passive Payers 65
Summary 66
The German Health Care System: Overview and Historical Development 67
Historical Development of the German System 70
Summary 76
Health Insurance in Germany 84
Statutory Health Plans 84
Coverage and Co-payments 87
Coverage of Individual Plans 89
Premiums and the Common Funding Pool 92
Risk Pooling 95
Health Plan Efforts at Cost Control 100
Private Health Plans 101
Private Plan Types and Coverage 103
Private Plan Premiums and Reimbursement 104
Assessment of the German Insurance System 106
Strengths 106
Weaknesses 107
Summary 118
Health Care Providers 120
Hospitals 120
Hospital Organization and Staffing 123
Hospital Service Lines 124
Integration Across Services 128
Hospital Use of Information Technology 131
Inpatient Reimbursement 132
Reimbursement for Private Patients 135
Health Plans’ Contracting for Hospital Care 136
Hospitals’ Relationships with Health Plans 138
Outpatient Care 139
Licensing and Contracting for Outpatient Care 140
Outpatient Service Lines 143
Lack of Integrated Outpatient Care 144
Disease Management 146
Information Technology in Outpatient Care 146
Outpatient Reimbursement 148
Outpatient Reimbursement for Private Patients 149
Rehabilitation Hospitals and Nursing Homes 150
Rehabilitation Hospitals 151
Nursing Homes 152
Recent Reforms to Promote Care Integration 154
Integrated Care Contracts (§140 SGB V) 156
Hospital Outpatient Care 158
Flexibility of Physician Employment 159
Outpatient Medical Care Centers 160
Summary 161
Overall Assessment of German Health Care Providers 163
Pursuing Stakeholder Interests Versus Value for Patients 163
Lack of Integration Across Specialties 165
Lack of Integration Across the Care Cycle 167
Limited Use of Information Technology 168
Lack of Value-Based Competition Among Providers 168
Overly Broad Service Lines and Inadequate Volume in Each Service 170
A Reimbursement System That Rewards Volume Instead of Value 172
No Culture of Continuous Improvement 175
Summary 176
The Role of Health Plans, Employers, and Patients in Health Care Delivery 178
Health Plans and Patient Care 178
Recent Changes 180
Employers and Health Care 183
Patients and Their Health 184
Recent Changes 186
Summary 188
Measuring the Results of Care 190
The History of Quality Measurement in Germany 192
New Approaches to Outcome Measurement 199
Measurement Using Billing Data 200
Measurement Based on Clinical Data 206
Measuring the Cost of Providing Care in Germany 214
Summary 217
Creating a High-Value German Health Care System: Overall Assessment and Recommendations 218
Failures of the Current System 219
A System Driven by Stakeholder Interests, Rather than Patient Value 220
Fragmentation of Service Delivery and Lack of Integrated Care Across the Care Cycle 221
Limited Patient Volume and Overly Broad Service Lines 223
Lack of Outcome and Cost Measurement Severely Limits Value Improvement 224
A Licensing and Reimbursement System That Works Against Value 226
Health Plans Have Failed to Add Value and Have Instead Concentrated on Shifting Costs 228
The Current Relationship Between the Public and Private Systems Distorts Incentives 230
Patients Are Uninformed, Uninvolved, and Make Choices Based on Convenience and Sometimes Short-Sighted Cost Savings 231
There Are Major Impediments to Competition for Patients, and Competition Among Providers and Health Plans Is a Zero-Sum Game 233
A Strategy for German Health Care Reform 234
Summary 263
Taxonomy of BQS Quality Indicators 264
Endnotes 270
Bibliography 293
Index 307
About the Authors 314