What insights did I get from attending last week’s Medical Technology Association of Australia’s (MTAA) summit on Value-Based Health Care?

1 Australia is still early in the journey

In an excellent presentation, Ben Keneally of Boston Consulting Group showed Australia is in stage two of four stages. Despite much strategic uncertainty about funding, in NSW small projects are trialling Value-Based Healthcare to understand the benefits and challenges.

2 Engaging with Clinicians is key to change

When changing complex systems like Healthcare, it is easy to get lost in the details and challenges.  Ben explained the key to implementing Value-Based Healthcare: engaging with Clinicians. The first step is for Clinicians to see that using Value as seen from the patients’ eyes can improve methods used to treat to deliver patient outcomes.

In the longer term, using value will reduce the costs of Healthcare. However, if clinicians see reducing cost as the main reason, then they are unlikely to adopt it.  Your ultimate goal maybe reducing the cost of Healthcare. However, the most effective path to achieving this strategic goal may be indirect. Identify the critical groups who must support change and then start the change process by improving what is important to them.  Start the journey with what’s important to them. Be patient while they discover for themselves the benefits of these changes. For anyone interested in learning about change journeys – get a copy of Warren Parry’s excellent book: Big Change, Best Path: Successfully Managing Organizational Change with Wisdom, Analytics and Insight.

3 Split Funding is a barrier to change

As all Australians know well; funding for healthcare is split between state government and federal government. Many times when things go wrong, each blames the other. This is an example of the broader issue; if you split accountability for the output of a process, then it’s tough to improve that process.

For Value-Based Healthcare, we need to have funding from start to finish of a patient getting better. Let’s look at the current system for a hip replacement. In a public hospital, federal government funds the replacement hip. If a hospital improves what they do and how they do it, then a patient may visit their GP less and need less rehabilitation. This may reduce state government costs, but gives no benefit to federal government. So why should they bother?

A good example of why it’s crucial to understand the financial incentives of different parties. The easiest way to do this is to follow the advice of Professor Dan Lovallo, “Follow the money”.

4 When there is strategic uncertainty, act to try things

Given the spilt funding discussed, it seems unlikely that Value-Based Healthcare will be mainstream in the next few years because of the difficulties of getting federal and other governments to work together.

So, does this strategic uncertainty mean you should do nothing? Definitely not!

You should try a few things. Specifically, do things that will help you:

• To gain better information
• To gain new or stronger relationships
• To gain experience

In times of strategic uncertainty, reduce your risks by taking small actions that help you explore and understand the strategic uncertainty.