Can standardization drive innovation?

July 23, 2019

Many consider “standardization” and “innovation” to be opposing forces, when in fact standardization might just be what is needed to effectively innovate around healthcare delivery and payment reform.

At the most recent ACO/BundledPayment/MACRA Summit in Washington, DC, Adam Boehler, deputy administrator for the Centers for Medicare and Medicaid Services (CMS) and the head of the CMS Center for Innovation, noted the importance of standardizing value-based payment models. In his words, “we started in full experimental mode,” adding that while “the million flowers bloom approach” made sense at the beginning, it can hurt if you do not cultivate what works, eliminate what doesn’t, and standardize around those factors that are common to successful models, including transparency, simplicity and accountability.

Transparency around data remains a challenge, as many physicians say they lack access to good data to enhance decision making. This includes data on both variation in clinical practice and the cost of different products and treatment options.

Practice variation data

Standardizing care pathways based on evidence of what works best for specific patient populations and disease states is considered by many to be one of the most effective ways to improve both the quality and cost of healthcare. A 2018 survey conducted by Lumere confirmed that most physicians (86 percent) agree that having access to more data on clinical variation would improve quality.1 At the same time, only slightly more than half of the physicians surveyed said their organizations were working on programs to reduce clinical variation in practice (57 percent) and in the selection of pharmaceuticals (53 percent) and medical devices (52 percent) for specific patient populations. As for whether such data would influence their decision-making, that appears to grow with experience. In that same study, only 32 percent of physicians with less than nine years of experience thought variation data would be very or extremely influential in their clinical decision making process, while that percentage jumps to 55 percent among physicians who have been practicing 20-plus years.

Cost data

The Lumere study results are even more striking when it comes to cost data. More than 90 percent of physicians surveyed believe having more access to cost data would improve the quality of care, but only 40 percent of doctors said their organizations were working to provide it. Once again, the perceived importance of cost data increases with experience, this time based on whether a physician has served on technology and device evaluation committees. More than 60 percent of physicians with such experience said cost data is highly influential in their clinical decision making, compared to just 45 percent among those with no committee experience. A Deloitte study,2 found even more striking differences between the perceived value and availability of cost data. More than 70 percent consider cost data highly valuable, especially at the point of care, but less than 30 percent say they have access to such data.

Clinical Integration: Involvement not employment

What’s most striking in the research is the lack of impact of physician employment. Less than 10 years ago, the level of clinical integration at hospitals was measured by the percentage of the medical staff employed by the hospital or healthcare system.3 Many hospital administrators believed that more physician employment correlate with greater alignment on healthcare system preferences regarding product selection. But the Lumere study found that employment status made little to no difference. In fact, in some instances, independent physicians appeared to be more aligned with hospital system preference than their employed colleagues. The only factor that seems to increase alignment is whether physicians are participating in shared savings programs (such as accountable care organizations, bundled payments and co-management programs). That factor is likely to have more weight as physician reimbursement is increasingly tied to cost.  Fifteen percent of the scores physicians receive under the Medicare Merit-based Incentive Payment System (MIPS) is now tied to cost, compared to just 10 percent in 2018 and nothing in 2017.

At the end of the day, it comes down to two factors that have the most influence on physician behavior: Access to data and involvement in decision making. In the Lumere study, more than 54 percent of physicians ranked the following as very or extremely influential:

  • Their involvement in the selection and contracting of devices and the development of clinical practice guidelines, protocols, or best practices at their hospital/health system
  • Their hospital/health system’s use of peer-reviewed literature and clinical data to support selection and contracting of devices

More than 86 percent of respondents rank those same factors as moderately, very or extremely influential in their decision making. Finally, the Deloitte study uncovered an interesting phenomenon. Physicians with access to data were nearly 50 percent more likely to consider cost data valuable in determining how they practice than their peers without access.

We’ve come a long way from the days when hospital administrators believed physicians only care about quality at any cost, and physicians viewed hospital executives as nothing more than number crunchers. Still, real innovation — to standardize on care that delivers better patient outcomes relative to the cost (the definition of value)4 — requires the involvement of physicians and meaningful collaboration depends on good, accessible data on cost, quality, and variation. 

1   Falk S, Cherf J, Schulz J, Huo A. Cost and Outcomes in Value-based Care. Physician Leadership Journal Website. Published January 23, 2019. Accessed June 7, 2019.
2   2018 Deloitte Insights Study: Volume to Value based care: Physicians willing to manage cost by lack data and tools. Published October 11, 2018. Accessed July 5, 2019.
3   Clinical Integration- The Key to Real Reform. American Hospital Association website. Published February 2010.
4   Porter ME. What is Value in Healthcare? N Engl J Med 2010; 363:2477-2481.
About the Author

Karen Conway | CEO, Value Works

Karen Conway applies her knowledge of supply chain operations and systems thinking to align data and processes to improve health outcomes and the performance of organizations upon which an effective healthcare system depends.  After retiring in 2024 from GHX, where she served as Vice President of Healthcare Value, Conway established ValueWorks to advance the role of supply chain to achieve a value-based healthcare system that optimizes the cost and quality of care, while improving both equity and sustainability in care delivery. Conway is former national chair of AHRMM, the supply chain association for the American Hospital Association, and an honorary member of the Health Care Supplies Association in the UK.