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Application of Business Model Innovation to Enhance Value in Health Care Delivery

Evan Fieldston, MD, MBA, MS; Christian Terwiesch, PhD; Steven Altschuler, MD
JAMA Pediatr. 2013;167(5):409-411. doi:10.1001/jamapediatrics.2013.1221.
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Faced with the need to improve quality, health care enterprises have used principles from highly reliable industries to make tactical progress. As the health care system faces growing challenges to transform itself, we propose business model innovation as a strategic framework for improving the delivery of health care. We believe that this approach will unify the domains of quality (safety, effectiveness, efficiency, timeliness, patient centeredness, and equity) with the need to enhance value by emphasizing innovation in a manner not traditionally seen in health care.

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Figure. Contrasting intensity or complexity with efficiency to achieve high-quality outcomes. By contrasting costs with efficiency, we show that the horizontal movements on this figure correspond to the concern of evidence-based management (EBMgt) for the right place, time, and provider, whereas the vertical movements correspond to the concern of evidence-based medicine (EBM) for providing the right care. A technical frontier (red arc) demonstrates the optimal combination of intensity or complexity and efficiency. The technical frontier is the combination of inputs that results in high-quality outcomes. Complex surgical procedures have a lower level of efficiency and a higher level of intensity or complexity. Ambulatory surgery, however, does not require the sophistication of hospital operating rooms, so it can be performed at a lower level of intensity or complexity on the technical frontier, which, in this case, is at an ambulatory surgery facility (ASF). Over time, it is typical for activities to move down the technical frontier as innovations make it possible to achieve the same outcome with less intensity or complexity, or to use standardization to achieve the same complexity with more efficiency (ie, from circle to triangle). Moving off the technical frontier, however, is not a value-oriented outcome.

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