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• Article | Health Affairs

  Navy Medicine Introduces Value-Based Health Care

  Alee Hernandez, Robert S. Kaplan, Mary L. Witkowski, C. Forrest Faison III and Michael E. Porter

  In 2016 the newly appointed surgeon general of the Navy launched a value-based health care pilot project at Naval Hospital Jacksonville to explore whether multidisciplinary care teams (known as integrated practice units, or IPUs) and measurement of outcomes could improve the readiness of active duty personnel and lower the cost of delivering care to them, their dependents, and local retirees. This article describes the formation of the project’s leadership structure; the selection of four conditions to be treated (low back pain, osteoarthritis, diabetes, and high-risk pregnancy); the creation of the care team for each condition; outcomes and costs measured; and the near-term changes in outcomes during the twelve-month pilot period. Patient outcomes improved for three of the four conditions. We describe factors that contributed to the project’s success. After the pilot concluded, the Navy combined the back pain and osteoarthritis IPUs into a single musculoskeletal clinical unit and established a similar IPU at another naval hospital and its clinics. The diabetes IPU was continued, but the high-risk pregnancy IPU was not. We offer several observations on the elements that were key to the success of the project, explore challenges and opportunities, and suggest that the pilot described here could be taken to greater scale in the Military Health System and elsewhere.

  Keywords: military health system; Health Care and Treatment; Cost Management; Projects;

  Citation:

  Hernandez, Alee, Robert S. Kaplan, Mary L. Witkowski, C. Forrest Faison III, and Michael E. Porter. "Navy Medicine Introduces Value-Based Health Care." Health Affairs 38, no. 8 (August 2019): 1393–1400.  View Details

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• Article | JAMA Internal Medicine | July 2019

  Evaluation of Economic and Clinical Outcomes Under Centers for Medicare & Medicaid Services Mandatory Bundled Payments for Joint Replacements

  Derek A. Haas, Xiaoran Zhang, Robert S. Kaplan and Zirui Song

  In 2016, the Centers for Medicare & Medicaid Services (CMS) launched its first mandatory bundled payment program, the Comprehensive Care for Joint Replacement (CJR) model, by randomizing metropolitan statistical areas (MSAs) into the payment model. The paper analyzed Medicare costs for beneficiaries undergoing lower extremity joint replacement between April 1, 2016, through December 31, 2017. The introduction of the CJR was associated with reduced Medicare Part A spending ($582 per episode, a 2.5% savings) largely through lower post-acute spending in skilled nursing facilities. The CJR hospitals had no significant differences in hospital length of stay, readmissions, complications, 30- or 90-day mortality, volume of episodes, or patient characteristics relative to the non-CJR hospitals. We conclude that mandatory bundled payments may help to change clinicians’ and facilities’ behavior without harming quality.

  Keywords: Medicare; Medicaid; bundled payments; Health Care and Treatment; Cost Management; Performance Evaluation; Outcome or Result;

  Citation:

  Haas, Derek A., Xiaoran Zhang, Robert S. Kaplan, and Zirui Song. "Evaluation of Economic and Clinical Outcomes Under Centers for Medicare & Medicaid Services Mandatory Bundled Payments for Joint Replacements." JAMA Internal Medicine 179, no. 7 (July 2019): 924–931.  View Details

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• Case | HBS Case Collection | July 2019

  Christmas Inc. (A)

  Susanna Gallani, Gregory Sabin, Lexor Adams and Nicholas Haberling

  Santa Claus is facing increasing pressures to contain costs. The economic model that has worked for centuries is starting to show some cracks, to the point that he is considering outsourcing part of its toy production. Evaluating the bids his team collected from potential subcontractors, he realizes that it is not at all clear how much producing toys in house costs them. He then instructs his team to perform an analysis using different costing approaches, so that he could then make an informed decision about the future production process at Christmas, Inc. This case exposes students to alternative costing methods and stimulates a discussion of their appropriateness to different situations. Additionally, although the case is set in a fictional world, it proposes a setting where students can learn about make-or-buy decisions and practice the analytical tools that are required to support such a strategic decision.

  Citation:

  Gallani, Susanna, Gregory Sabin, Lexor Adams, and Nicholas Haberling. "Christmas Inc. (A)." Harvard Business School Case 120-009, July 2019.  View Details

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