Increasing 'value': the work of Michael Porter

5th January 2013

What is 'value'?

Michael Porter (2010) has defined value as health outcomes measured against overall costs. (New England Journal of Medicine 363;26 pages 2477-2481)

Outcomes

Central to this theory is that outcomes must be defined from the perspective of the customer and not the organisation. Focusing on medical services, Porter proposes client defined outcomes as having three tiers.
  1. Tier 1: Health status achieved
    1. Survival
    2. Degree of recovery
  2. Tier 2: Process of recovery
    1. Length of time to recovery
    2. Amount of discomfort in recovery process
  3. Tier 3: Sustainability of on-going health
    1. Likelihood of relapse
    2. Negative effects of treatment on functioning
Organisational outcomes such as how many people have been seen and how long they waited to be seen are not as important as client defined outcomes. Such outcomes such as recovery from a chronic disease or an adverse set of circumstances (e.g. involvement with a gang) may involve a wide range of interventions and organisations over a long period of time and may need to be measured across a variety of teams and services. .

Overall costs

Costs need to be considered with respect to all aspects of services contributing to achieving the desired population outcomes over time. So, for example, recovery from depression should include costs of psychological and medical treatment, costs of loss of earnings and additional costs (e.g. child care) not just narrowly defined therapy costs.
According to Porter's theory, one of the key stages of being able to increase value provided by a service is the necessity of being able to reliably measure client defined outcomes.

Implications for AMBIT

  1. Outcomes should be developed in collaboration with the clients who use the service. For example, client defined outcomes might be 'getting money legally' or 'reducing stress,' 'feeling safe on the street' or 'staying out of trouble with the police.' This has been similarly highlighted by systems approaches to organisations such as in the work of John Seddon (see Increasing service value: the work of John Seddon).
  2. Theories of value emphasise the importance for AMBIT teams of trying to establish routine ways of measuring outcomes of their work in order to be able to evaluate the degree to which client defined outcomes are being achieved by the service.
  3. With routine measurement of outcome, adding value may become more easy to define and achieve. For example, if over a period of one year 30% of service users 'stay out of trouble with the police', the challenge for the service would be whether this could be increased by developing improved ways of working, a process of team reflection and creativity that may be enhanced by Manualization.