Harvard Kennedy School
of Government
Outcome-Driven Innovation
Program Results – Providers – January 2004
What is the goal of this project?
The goal is to provide:




Suppliers
Insurers
Regulators
Service providers
and others with the market insight that is needed to
direct resources and speed progress toward health
care reform and market and product innovation.
What are the challenges?
There are many constituents - suppliers, insurers,
regulators, service providers and patients - all of whom
have conflicting desired outcomes …
… but to create improvement, value must be defined
through the eyes of the customers – mainly the patient
and the provider.
What are the project objectives?





Understand what patients and providers are trying to
get done – i.e., jobs, outcomes and constraints
Prioritize opportunities for improvement
Identify groups of providers and patients who are best
suited to create an effective health care model
Use this information to formulate an innovative solution
to health care
Create a framework in which idea generation for a new
health care delivery model can be objectively assessed
for its impact on patients and providers
The Components Of Success
Patient
Outcomes
Provider
Outcomes
Inputs
New Delivery Model
Idea Generation
Refine against Outcomes
Refine against Constraints
Optimized Solution
What steps have we taken?



Phase I: Understand patients as a
customer set
Phase II: Understand providers as a
customer set
Find opportunities for an innovative
health care model that satisfies the
outcomes of the providers and the
patients
Patients: How was Phase I accomplished?
 Identify Customer Outcomes
 In May 2002, we conducted interviews with 70 males and
females of all ages and income levels. The interviews
were conducted in Miami, FL and Minneapolis, MN.
 72 jobs and 42 outcomes were identified in this stage.
 Prioritize Inputs
 Between August and October 2002, we surveyed 270
individuals that represented an accurate sample of the
US population across age and gender.
 Identify Broad Market Opportunity
 Opportunity scores of 12.0 or higher are considered
significant areas of opportunity.
What opportunities exist among the patient
population – for Maintaining Health?
Job to be done
Importance
Satisfaction
Opportunity
Detect any disease or illness at its earliest possible stage
9.4
5.1
13.7
Know with certainty that your body is free from disease,
infection, tumors
9.3
5.1
13.5
Reduce the risk of developing age-related diseases or
disabilities - e.g., cancer, stroke, arthritis, heart disease,
osteoperosis, gum disease
9
4.6
13.4
Maintain the desired level of physical performance stamina
8.7
4.1
13.3
Determine if blood is flowing normally through the arteries
(e.g., locate clogged arteries)
9.2
5.2
13.2
Get the proper amount of sleep
8.5
4.1
12.9
Maintain mobility of the joints
8.8
4.8
12.8
Reduce the risk of contracting an incurable or potentially
fatal disease - e.g., AIDS, multiple sclerosis, cancer
9.4
6.2
12.6
Achieve the desired level of energy - prevent fatigue
8.4
4.2
12.6
Opportunity scores of 12 or greater represent significant opportunities for improvement.
What opportunities exist among the patient
population – for Seeking Health Care?
Job to be done
Importance
Satisfaction
Opportunity
Minimize the cost of medical insurance
9.4
2.4
16.4
Minimize out-of-pocket costs for standard medical
treatment
9.2
3.1
15.3
Minimize the cost of long-term care insurance
8.5
2.1
14.9
Minimize the time it takes to obtain approval from the
insurance company for a requested treatment or
procedure
9.1
3.7
14.5
Increase the percent of treatment options that are
considered - including alternative medicines and new
drugs or treatments
8.7
3.1
14.3
Minimize out-of-pocket costs for prescription drugs
8.9
3.5
14.3
Minimize the cost of long-term disability insurance
8.1
2.2
14.0
Minimize the time it takes to get an appointment with a
specialist - e.g., referrals and other doctor visits not
required
8.6
3.2
14.0
Minimize the number of mis-diagnoses
9.3
4.6
14.0
What unique patient segments exist based
on the Jobs for Maintaining Health?
This segment manages health from
the inside-out as they address
issues related to food
consumption, nutrient absorption
and food processing. “You are
what you eat.”
21%
Segment 1:
Food Centric
This segment manages health from
the outside-in, as they are focused
on maintaining weight, muscle tone
and joint flexibility - as well as
managing anxiety. “Look good feel good”.
Segment 2:
Body Basics
This segment manages health from
21%
the mind, as they are intent on
keeping it clear and focused and free
from stress. “Healthy mind, healthy
body”.
Segment 3:
Healthy Minded
34%
This segment feels their health is
pre-destined and acts to prevent or
control diseases to which they
believe they are genetically
disposed.
Segment 4:
Genetically At Risk
24%
Segment 1: Food Centric / Self Reliant

This group wants to take charge of their own health. They focus on what
goes into their bodies, are more concerned with what to eat, nutrient
imbalances, toxins and toxic effects and food absorption and processing.
They are also concerned with overburdening any internal organs and
making sure they are working properly. Memory is also a key issue.

When obtaining health care, they seem to have a strong mistrust of the
doctors. They are more concerned with the doctor’s qualifications,
questionable tests and procedures, questionable ‘follow up’ visits, with
costs for non-standard treatments and with treatment plans that do not
work. They make more doctor visits than average and feel they should
have better access to premium services.

This segment contains a higher population of women (64%) and people
under 5’6’’. They tend to have lower than average incomes, come from
the Northeast or Northwest and have more children between 1 and 5.
They have a greater concern for their health, are more likely to have
government paid insurance and to be unsatisfied with their primary
physician.
21%
Segment 2: Body Basics / Pay As You Go

Individuals in this segment manage health from an external perspective.
They are concerned with maintaining muscle tone, body weight and joint
mobility as well as maintaining concentration and focus and managing
anxiety. They are also concerned with preventing the recurrence of a
disease as well as preventing a genetically disposed disease.

When obtaining health care they are especially concerned with the out of
pocket costs for standard treatments and much less satisfied in many
areas of seeking care. They are concerned with the time it takes
insurance companies to approve requested treatments and second
opinions along with them denying treatments and dragging their feet
when paying charges. This segment is also concerned with the cost of
prescription drugs.

The individuals in this segment tend to be less educated and contain a
higher percentage of smokers (25%) and people without insurance
(15%). They are more likely to be between 20 - 34 and 65 - 80 and to
use the web to diagnose problems, find alternative treatments and to
validate diagnoses.
34%
Segment 3: Healthy Minded

Individuals in this segment believe that a healthy mind means a healthy
body. They want to maintain a positive attitude, stay mentally alert, get
the proper amount of sleep and maintain focus and concentration. They
want to remain free from pain and relieve physical stress. They are also
concerned with contracting and spreading disease and with unwanted
drug interactions.

This group wants to minimize the chances of mis-diagnoses and
receiving the wrong treatment along with reducing the negative sideaffects from the treatment.

Individuals in this segment tend to be middle age (35 - 54), more
educated, have higher incomes and older children at home. They are
less concerned about health care issues although most have insurance
(97%). They are more satisfied with their insurance company and with
their primary physician and are more likely to believe that only those that
can afford superior health care should get it. They are more likely to be
from the Northwest and to search the web using Google and “other”
methods - but not for diagnosis information.
21%
Segment 4: Genetically At Risk

Individuals in this segment are trying to determine if any genetic defects
exist, to prevent the onset or reoccurrence of a genetically disposed
disease and/or to learn to control a disease or problem once diagnosed.
They are strongly concerned with the toxin levels in their body and if their
senses and internal body parts are overburdened or functioning
improperly. Relieving mental stress is also a key issue.

When obtaining health care they want to obtain care quickly in the event
of an emergency and to reduce the cost of long term disability insurance.
They are very concerned with many aspects of diagnosis including
ensuring accuracy and reducing the time it takes to determine the extent
or seriousness of the problem. They want to ensure that needed
diagnostic tests are covered as well as needed treatments and
procedures.

This segment tends to be somewhat older, more educated and to have
higher incomes. They are the least satisfied with their health care
coverage, most likely to use alternative treatments and to believe that
everyone should have the same care - regardless of what they can
afford. They are more likely to use the web (Web MD) and to live in the
upper mid west.
24%
Patient confidence is still high
 Barely 25% of patients expressed a high degree of
distrust in the system
 Less than 20% think they can do better than their
doctors
 Over 60% want more choice over how they spent the
money employers contribute to their healthcare
(supporting voucher and MSA’s)
 Patients (86%) want to play a more active role in
managing their health
Providers: How was Phase II
accomplished?
 Identify Customer Outcomes
 In July 2003, we conducted interviews with approximately
55 providers, including primary care physicians,
specialists, nurses and alternative care providers.
 109 outcomes and constraints were identified through
this process
 Prioritize Outcomes
 In July and August 2003, we surveyed 180 healthcare
providers, that represented a sample of the target
population and included the same types of providers
listed above.
 Identify Broad Market Opportunity
 Opportunity scores of 12.0 or higher are considered
significant areas of opportunity.
What opportunities exist among the provider
population – practicing medicine?
Practicing Medicine Outcomes
Importance
Satisfaction
Opportunity
Minimize the number of people who adopt poor behavior
and lifestyles (e.g., smoking, obesity, etc)
8.6
2.0
15.2
Minimize the frequency with which providers are limited in
treatment options due to health plan restrictions
8.6
2.4
14.8
Minimize the time it takes to get a non-formulary medicine
approved by the insurance company, e.g., get an override
8.4
2.0
14.8
Minimize the time it takes to obtain a patient's complete
medical record including other physician notes, lab reports
and x-rays
8.7
3.0
14.4
Minimize the time that is spent determining what drugs are
covered by the patients insurance
7.9
1.9
13.9
Minimize the chance of harmful prescription errors, e.g.,
dosage errors, incompatibilities, conflicts with other
medications
9.5
5.1
13.9
Opportunity scores of 12 or greater represent significant opportunities for improvement.
What opportunities exist among the patient
population – managing medicine?
Managing Medicine Outcomes
Importance
Satisfaction
Opportunity
Increase the number of reimbursements that are fair, e.g.,
proportionate to the level of expertise, time and effort put
forth
8.9
1.5
16.3
Minimize the likelihood of patients foregoing needed care
because they cannot afford it
9.0
2.0
16.0
Minimize the time that is spent preparing medically
unnecessary documentation in order to protect against
legal liabilities
8.8
1.7
15.9
Minimize the likelihood that recommended provider
treatments are second guessed by people who are not
qualified to do so, e.g., insurance clerical workers
8.6
1.6
15.6
Minimize the cost of malpractice insurance
8.7
1.8
15.6
Increase the threshold of reimbursement - the base level
of reimbursement
8.5
1.6
15.4
Note: The opportunity scores seen for this group are unlike any others – they are
substantially higher than what we find in any free market environment.
What constraints do providers have on a
health care model?
Constraints
Importance
Satisfaction
Opportunity
The model must ensure people take responsibility for their
own health
9.0
1.4
16.6
The model must improve the patient's motivation to make
needed lifestyle changes
8.8
1.7
15.9
The model must give providers the freedom to practice
medicine
9.6
3.6
15.6
The model must reward providers for doing the right thing
8.5
2.3
14.7
The model must reduce the cost of pharmaceutical drugs
8.0
1.3
14.7
The model must not financially incent the provider to
withhold care from the patient
9.2
3.8
14.6
The model must not increase overhead
8.1
1.7
14.5
The model must financially incent patients to not abuse
the system
7.8
1.5
14.1
Opportunity scores of 12 or greater represent significant opportunities for improvement.
What can we conclude about the
constraints?
 A new healthcare model must address the
misalignment of incentives of both patient and
physician
 A new healthcare model must be willing to put more
responsibility on the patient for their health
 The cost structure of the new model must be
equivalent or better than the current one
Future Health Care Model Ideas
To what extent do you agree with …
Top Box
Use of email and phone ‘visits’ with patients
44%
Structure reimbursement based on physician performance (quality of care, outcomes, etc.)
62%
Patient to play a more active role in their health care
92%
Allow for real-time metrics on patient health electronically, allowing on-going diagnosis without a physical
visit
19%
A single payor universal health care system run by the government (expanded Federal Health Plan
Benefit)
26%
Clear shared articulated risk between doctor, patient and insurer
81%
Severity adjusted bundled rate in exchange for being able to practice as provider sees fit
38%
System should allow me to meet my income goals for hard, quality work
89%
I would prefer to mentor, partner or instruct patients
89%
I would prefer to work within a small practice that was part of a large virtual corporation (partnership
approach) as opposed to a larger multi-specialty group practice (salary based)
55%
Health insurance should allow the customer to choose either catastrophic or all circumstance insurance
78%
I believe the consumer self choice model will succeed
55%
Role of Insurers
Contrary to expectations …
… we also found that only 35% of the providers
believed that ‘insurance companies add no
value’.
Provider’s Natural Segmentation
This segment is concerned with managing
the long term health of their patients.
They prefer to interact with patients in
person, focus on preventative medicine,
and are very concerned with referrals.
34%
Segment 2:
Time Constrained
35%
Segment 3:
Patient Conscious Perfectionists
Segment 1:
Total Health Managers
This segment consists of health care
providers who are very crunched for time.
They don’t like redundancy, don't want to
spend excessive time with patients, and are
very concerned with the cost of managing
the practice.
This segment wants to spend more time
educating and diagnosing patients –
working with them. They want to conduct
accurate diagnoses and minimize patient
complications.
22%
This segment consists of providers who
are focused on getting a patient taken care
of in an efficient manner, without wasting
extra time or effort. They are also uniquely
concerned with limiting workload.
Segment 4:
Efficiency Minded
9%
Segment 1: Total Health Managers
34%
This substantial segment wants to spend time working with their patients for their
long-term health. They are very open to alternative care programs and
emphasize preventative care. Because they are often the first line of care, they
need to have a solid referral base on which to draw as well as good tools to
identify needed specialists.
This group has a much higher percent of NP’s, PA’s and Chiropractors than the
total market. This group is younger than the average, and is more likely to be
female, in practice less than 10 years, and more likely to be in the bottom
income range (< $100,000 per year). This group is also much more dissatisfied
with their income.
Regarding the future of healthcare, this group strongly resists email or phone
visits with patients, reimbursement based on performance, real-time electronic
monitoring of patients, and insurance companies. They are however, the
strongest advocates of patients playing a more active role in their own care.
Segment 2: Time Constrained
22%
This group represents the high patient-load, managed care oriented physician.
They see many more patients per week than the average and have higher
incomes. They have a disproportionate share of male PCPs and Specialists in
large group practices and partnership models with the majority of reimbursement
coming from managed care.
They want ready access to patient’s medical history and want to reduce the time
it takes to evaluate treatment options, collaborate with other providers about the
patient’s care, and monitor drug effectiveness when formularies require change
in medication. They are highly concerned with all aspects of labor costs and the
issues surrounding working with multiple insurance carriers. This group is also
concerned with over-utilization of services and ordering duplicate services
This group is very receptive to technology-enabled efficiencies. They strongly
agree with email and phone ‘visits’ and real-time monitoring of patients. They
also disproportionately believe that insurance companies DO add value and like
the idea of reimbursement based on performance and severity adjusted bundled
rates in exchange for autonomy in practicing medicine. They also strongly
believe the consumer self-choice model will work.
Segment 3: Patient Conscious
Perfectionists
35%
This segment wants to spend more time diagnosing patients, educating them and
working with them. Their primary concerns are conducting an accurate diagnosis,
minimizing patient complications and making sure patients have access to the care
they need.
They are not concerned with high labor costs or insufficient referral networks. This
could be due to the higher proportion of providers in this segment that work for a
managed care organization or a specialized hospital system that provides a
substantial infrastructure and specialist base.
This group has a higher representation of specialists and surgeons and a higher
portion of indemnity reimbursement. They are more likely to have worked for all three
types of provider models (independent, salaried, and partnership). They are older
than average (55 years and older), are twice as likely to be satisfied with their income,
and have a higher propensity to want to mentor and partner with patients than the
average.
This group likes the idea of different types of patient visits (email and phone) as well
as remote monitoring of the patient’s condition. They are not as enthusiastic about
performance-based reimbursement, nor do they believe the consumer self-choice
model will work.
Segment 4: Efficiency Minded
9%
This segment is a small set of the population that seeks to provide solid care to their
patients but doesn’t want to waste time or work too many hours. They want to make it
easier to collaborate with other providers that are involved in the patient’s care and be
able to benchmark against best practices. Their specific concern with limiting the
hours worked is twice that of the general population makes them a good group to
approach with a salaried provider model with traditional work hours.
This group is much more concerned with reducing the number of visits necessary to
diagnose patients and the time spent collaborating with other health care providers
regarding the patient’s condition. They also want to reduce the time it takes to obtain
pertinent information from the patient and the time it takes the patient to accept a
treatment plan.
This group contains over twice the percentage of nurses than the market as a whole.
It also contains much more seasoned professionals (over 20 years in practice) who
see less patients per week. They are much more likely to work in a general hospital or
government / university hospital.
This group strongly opposes email or phone visits as well as severity adjusted bundled
rates.
What can we conclude about Provider
inputs?
 Providers are naturally segmented by how they want
to practice medicine – no other variables accurately
reflect how they differ
 The segment a provider is in dictates the type of health
care environment in which he/she will be most
comfortable working
 Health care organizations can use this information to
better attract the types of physicians that will work well
in the type of environment they are trying to create
Tying It All Together
Patients already pay significantly – to stay
healthy …
Patient
Pays




Personal trainers
Gyms
Food supplements
Nutritionist
counseling
 Diagnostic
preventative tests
 Experimental
Treatment
 Infertility
 LTC
Insurance
Pays
Healthy
Sick
$70 Billion Annually
But they expect to pay nothing when they’re
sick …
Patient
Pays
Insurance
Pays




 Experimental
Treatment
 Infertility
 LTC
 Well checkups
 Immunizations







Personal trainers
Gyms
Food supplements
Nutritionist
counseling
 Diagnostic
preventative tests
Healthy
Hospitalizations
X-Rays
Laboratory
Prescription Drugs
Transplants
Chronic Diseases
Restorative Care
Sick
How do you create a market for traditional
health care?
Follow the dynamics of market creation that
the upper quadrants have done …
… by creating a health care model that can
better meet the outcomes of the segment of
patients you want to target.
Match Provider outcomes to Patient
outcomes to create maximum value
Provider Segments
S1:
Total Health
Managers
Patient Segments
S2:
Time
Crunched
S1: Food
Centric
S2: Body
Basics
S4:
S3: Healthy
Minded
S4:
Genetically
At Risk
S3:
Patient
Conscious
Perfectionists
Efficiency
Minded
Patient Self-Choice
Rationale:
Total Health
Managers
Food
Centric
Patient
Conscious
Healthy
Minded
A combination of Total Health Managers
and Patient Conscious Perfectionists
would be ideal for two of the larger patient
segments – by providing care how and
when they want it.
With such a combination, the Total Health
Managers will be available for common
ailments and well visits. The Patient
Conscious Perfectionists will be there to
assist when more specialized care is
needed.
These two patient segments tend to focus
heavily on their own care and health and
seek care only when needed.
Tying it All Together
Provider Segments
S1:
Total Health
Managers
Patient Segments
S2:
Time
Crunched
S1: Food
Centric
S2: Body
Basics
S3: Healthy
Minded
S4:
Genetically
At Risk
S3:
Patient
Conscious
Perfectionists
S4:
Efficiency
Minded
Kaiser Model – Provider/Payor
Rationale:
Total Health
Managers
Food
Centric
Time
Constrained
Body Basics
This combination of providers will be a highly
efficient group who will welcome technology that
will increase their capacity. Because the Time
Constrained group is used to handling large
workloads, the addition of more Total Health
Managers to their practice would make them even
more efficient and provide better care to the
patient.
The Food Centric - Self Reliant will likely enjoy this
model as they will be able to gain trust in the
system as a whole instead of having to evaluate
each doctor they come into contact with. This
model should also reduce their suspicion about
unnecessary visits and financial motivations for
doctor recommendations.
The Body Basics - Pay As You Go group is likely to
be attracted to this type of practice’s lower out of
pocket costs. This group is also likely to be lower
utilizers due to their age and demographics and
will therefore financially benefit the provider model.
Mayo Model
Provider Segments
S1:
Total Health
Managers
Patient Segments
S2:
Time
Crunched
S1: Food
Centric
S3:
Patient
Conscious
Perfectionists
S4:
Efficiency
Minded
S3: Healthy
Minded
S2: Body
Basics
S4:
Genetically
At Risk
Mayo Model
Rationale:
Healthy
Minded
Patient
Conscious
Perfectionists
Genetically
at Risk
This group of providers wants to provide
high level specialized care. They want to
ensure plenty of time is spent with patients
to make the most accurate diagnosis.
This model would be attractive to the
Healthy Minded group who wasn’t as
concerned with paying more for premium
services. While this group of patients is
likely to seek care, when they do, they will
want full attention and top physicians.
The Genetically Pre-disposed group will
benefit from the expertise of this model and
will likely seek pre-emptive care and
predictive tests – even at out of pocket
costs.
Single-Payor Model
Provider Segments
S1:
Total Health
Managers
Patient Segments
S2:
Time
Crunched
S1: Food
Centric
S3:
Patient
Conscious
Perfectionists
S4:
Efficiency
Minded
S3: Healthy
Minded
S2: Body
Basics
S4:
Genetically
At Risk
Single-Payor Model
Rationale:
Total Health
Managers
Body Basics
Efficiency
Minded
This group of providers will do well in
an environment paid by salaries with
managed workloads. This group would
also benefit from giving NP & PA’s
more responsibility for the care of the
patient’s basic needs.
The Body Basics - Pay As You Go
group is likely to be the best patient
target for such facilities as they want
care to be as inexpensive as possible.
Next Steps to Consider
 How do the Outcome-based Segments apply to your
organization?
 What provider and or patient segments are most suited
to your organization?
 Are these segment differences reflected in your provider
base and if so, do you modify their patient load
accordingly?
 Are there ways in which you can target a specific
outcome-based patient group to be more profitable?
 Are there ways that your organization can address the
outcomes that patients are trying to achieve in
maintaining health?
Next Steps to Consider
 What health care models could be devised to leverage
this market-driven perspective?
 How do we satisfy both patient and provider outcomes?
 Different ideas/solutions/theories can be evaluated
against the outcomes of both constituents
 The outcome-based model will show exactly what the
areas need to be re-addressed to maximize value
 Systematic modeling and simulation is possible – how
can they system be optimized?
 Let’s evaluate ideas and begin to propose some possible
solutions
Tony Ulwick, CEO Strategyn
ulwick@strategyn.com
(561) 582-6336
Sandy Bates, Strategyn
sbates@strategyn.com
(512) 527-0911