The Amsterdam Diabetes Center

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MBA Healthcare Management Thesis The Amsterdam Diabetes Center

The Amsterdam Diabetes Center

Author: Alexander Later, M.D. Student of the MBA Healthcare Management

Contact: afl.later@stjansdal.nl Date of submission: 21-2-2018

prof. dr. M. Kramer, member of the board of directors VUmc.

dr. M.F.L. Rademakers, adjunct professor corporate strategy UvA.

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Executive Summary

With per capita healthcare expenditures rising, it is of outmost importance to ensure that maximum possible value is created with each euro spent. Through its focus on outcome of the full cycle of care, value-based healthcare has the potential to gear the healthcare industry from zero- towards positive-sum competition. With the launch of the Amsterdam Diabetes Center, a collaboration of four

hospitals in Amsterdam focused on delivering care for diabetes patients, an unique opportunity exists to innovate existing hospital business models into ones that accommodate the imperatives of value-based healthcare.

This thesis answers what business model best suits the Amsterdam Diabetes Center in order to fully exploit the advantages of value-based healthcare: a multidisciplinary approach to the full cycle of care for patients with diabetes. Three distinct business models serve the community of both type 1 and type 2 diabetes patients: uncomplicated type 2 diabetes is to be diagnosed and managed in a hospital solution shop, whilst patients with uncomplicated type 1 diabetes are best served in a value added process clinic. The latter further provides the protocolled multidisciplinary collaboration and closed feedback loops necessary for the care for complicated type 1 and type 2 diabetes. Overall management of diabetes, irrespective of its pathogenesis, should be offered through a network solution business model

This thesis contains a proposed value chain of the Amsterdam Diabetes Center, intended as a quick reference guide for aligning processes related to the overall cycle of care.

With the rising popularity of independent practice units, the VUmc should use an integrated organization perspective to exploit synergy between organizations. The strong common strategic vision shared between both VUmc and ADC favors a cooperative management style

With revenues worth about € 375.000,- and a profit margin estimated at around 5%, the Amsterdam Diabetes Center provides a small scale experiment for the VUmc to get acquainted with innovative healthcare. Besides expected benefits through better efficiency and cost control, an affiliates program, an outcome driven reimbursement system, and long term contracting with health insurers should contribute to an independent, healthy financial state of the Amsterdam Diabetes Center.

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Introduction

In a decade where per capita healthcare expenditure rises continuously, evaluation of the business model of a hospital is not only an academical exercise, it serves society as well: a well aligned business model makes sure that maximum possible value will be created with each euro spent on healthcare (Margretta, 2002). In 2006, leading strategists Michael Porter and Elizabeth Teisberg published their vision of a healthcare system in which every actor is focused on improving value, as measured by health outcomes measured per euro expended (Porter, 2006). This so called value based healthcare is in stark contrasts with today’s dysfunctional competition, where players shift costs, try to capture more revenues, and restrict services. Although inspiring and most likely to benefit of us all, implementation of value based healthcare takes time and is hindered by legal and organizational constraints. It furthermore remains unclear what business strategy and business model best supports the stunning potential that value based healthcare can bring us in

improvements in the health value derived.

This thesis addresses the importance of strategy- and business model development by exploring what business strategy and – model best serves the Amsterdam Diabetes Center (ADC), a new collaboration between four hospitals in care for diabetes patients. Although well on its’ way, design and roll-out of the Amsterdam Diabetes Center could benefit from a thorough analysis of the pros and cons of different business models. This thesis answers three questions:

1. How should care at the ADC be organized, and what business model best suits the ADC when the principles of value based healthcare are to be implemented?

2. What should the value chain of the ADC look like?

3. What corporate strategy best suits the VUmc when care is to be organized in independent practice units?

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Besides these three main questions, two sub-questions will be answered:

a. What revenues will be lost for the VUmc when care for uncomplicated diabetes patients will be transferred to the ADC?

b. What new ideas to pay for the new business model will suit the ADC?

After a case description, the theoretical framework behind the concepts used to answer these questions will be explained. The results section systematically answers the research questions just mentioned. I will then end with a conclusion and recommendations for the ADC.

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Case Description

The Amsterdam Diabetes Center

The VU Medical Center (VUmc), Amsterdam Medical Center (AMC), Onze Lieve Vrouwengasthuis (OLVG) and Medisch Centrum Jan van Gooyen (MC JVG) have decided to collaborate in the care for patients with diabetes mellitus (DM). Care will be provided in a new, dedicated treatment facility called the Amsterdam Diabetes Center (ADC). This collaborative strives several purposes: for the two academic hospitals, concentration of high volume, relatively low complex healthcare means freeing up for the complex, academic patients they are ought to serve. As training hospitals, their teaching and research mission, however makes them keen to still control and participate in less complex care. For the OLVG and the JVG clinic, close collaboration with the two academical centers means an important competitive advantage in a continuously consolidating healthcare market. Last but not least, for the diabetic patients a dedicated center serving the needs for both non-complex and complex diabetic patients means a concentration of expertise, efficient processes and, hopefully, better results in their treatment.

Clinical background: diabetes

Diabetes mellitus (literally “honey sweet perfusion”) entails a group of metabolic disorders where an increased blood glucose level persists over a prolonged period. Acute and life threatening

complications of this hyperglycemia state include diabetic ketoacidosis and a hyperosmolar hyperglycemic state, whilst long term complications include chronic kidney disease, cardiovascular disease, stroke, foot ulcers, and loss of sight.

Type 1 diabetes is caused by a relative lack of insulin production by the pancreas. Type 2 diabetes results from insulin resistance, where cells fail to respond to insulin properly. Development of type 2 DM can often be prevented or delayed by maintaining a normal body weight, regular exercise, and a healthy diet. Gestational or pregnancy induced diabetes is a third form of diabetes, whilst maturity onset diabetes of the young is an inherited form of diabetes.

Once DM has been established, management concentrates on maintenance of normal blood glucose levels through a healthy diet, weight loss, or medication (insulin in the case of type 1 diabetes, and oral medication as well as insulin in type 2 diabetes). Patient education about the disease and training of self-monitoring encompass important cornerstones in disease management, as well as

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management of other health problems that may impact the negative consequences of DM: smoking, a high blood pressure, obesity, and lack of exercise. Diabetes therefore is a multi-dimensional disease, where close collaboration between physicians, dieticians, physiotherapists, nephrologists, cardiologists, surgeons and trained nurses are de rigeur.

Despite all research, today contrast in the level of understanding, and therefore the treatment, of type 1 and type 2 diabetes remains. Although not curative, insulin in type 1 diabetes directly addresses the root cause of the disease and can be entirely rules-based: patients with type 1 diabetes measure their own blood glucose levels at home, and self-administer specific quantities of insulin, to be determined from an algorithm. Through a process of trial and error, type 1 diabetes patients not for long become experts in managing their own glucose levels. The responsibility for the care of type 1 diabetes patients thus shifts from the physician to the patient.

In contrast, in type 2 diabetes, diagnosis and treatment remain in the realm of intuitive medicine. Most patients are diagnosed later in life, but an increasing number of patients are diagnosed in childhood. Some type 2 patients are obese, whilst others are not. Some require insulin, whilst for others, oral medication suffices. In other words, type 2 diabetes actually encompasses as many as 20 different disorders with possibly very different molecular root causes and therefore very different treatment regimes.

Rationale for a new diabetes clinic

In Amsterdam, about 8% or 75.000 people of all 880.000 citizens have diabetes mellitus. It has been estimated that this number will increase with 30%, to 97.500 patients, in the next 20 years (source: projectgroep ADC). The quality of diabetic care in Amsterdam is suboptimal: when compared with surrounding regions, an above average use of insulin (necessary for type 1 diabetes but seen as the ultimate treatment regime for DM type 2, when all other things have failed), and a higher mortality, when corrected for age and gender, can be seen (Figure 1, 2, and 3), indicating the need for

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Figure 1 .The Number of Patients with DM per 1.000

Inhabitants

Source: RS & BASIC, VEKTIS

Figure 2. The Regional Use of Insulin in the Netherlands

Source: Gipdatabank.nl

Figure 3. Mortality and DM

Source: CBS doodsoorzaken, GGD Nederland.

Together with the notion that treatment of about 20 to 30% of all diabetes patients is currently not up to standard, that not all patients in need of complex diabetes care are in scope, that care for diabetes patients currently is fragmented, and that follow-up of non-complex patients continues to take place in expensive quaternary care facilities, the four collaborating clinics had a strong incentive to improve diabetes care in the region Amsterdam, and nationwide.

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Mission and vision of the Amsterdam Diabetes Clinic

In 2016, the first meetings for the organization of the Amsterdam Diabetes Center were organized. The results of these meetings are captured in a report (Appendix A) and described below:

The mission of the ADC is to become the nations’ primary referral center for complex

diabetes care. Care involves all stages of diabetes, and chronic disease. The ADC provides easy access consultation to primary healthcare providers and takes pride in innovation. The vision of the ADC is to provide the diabetes patient with tailor made, non-standardized care. The patient with DM is actively involved in his or her treatment, and multidisciplinary working professionals provide excellent healthcare. Research is focused on a better

understanding of diabetes, but also serves to innovate current treatment processes, where implementation of the leading principle behind value based healthcare, the continuous evaluation of the quality of delivered care, is of outmost importance.

The overall aim of the collaboration is to provide high value care to more complex forms of diabetes, where standard care has proven to be insufficient. The ADC wants to become a renowned expertise center that forms partnerships with both primary and secondary care providers, and governmental healthcare organizations and private companies. In 5 years’ time, the ADC:

1. Is known as the primary referral center for second opinions nationwide among 90% of referring physicians and patients.

2. Is the primary referral center for 75% of all primary care providers in Amsterdam.

3. Has transferred care of 90% of all type 2 (non-complex) diabetes patients to primary physicians .

4. Has expanded with yet another hospital in Amsterdam.

5. Has small scale facilities to conduct experiments with innovative forms of healthcare delivery.

6. Provides endocrinologists in training with in center education.

7. Employs providers and professionals that are satisfied with their work.

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The business case of the ADC

The business case has been briefly stated in the report (Appendix A). Several implications of outsourcing of care for diabetic patients from the collaborating hospitals towards the ADC are mentioned:

• Loss of revenues for the participating hospitals due to less outpatient visits, admissions, diagnostic procedures, and secondary referrals.

• Loss of revenues due to better patient self-management and referral to the primary physician.

The impact on revenues for the AMC, VUmc and OLVG is not clear. It is stated that this has to be investigated with a financial controller.

The revenue model is not further specified, but additional income from facilitating phase 1 and phase 2 research on diabetes patients by pharmacists is mentioned.

In November 2016, Health Venture Partners, a consultancy firm specialized in re-development and innovation of health concepts (www.healthventrurepartners.nl), further explored the business case, providing further details on the governance structure of the ADC (appendix B).

• The ADC is to be organized as a separate business unit from the MC JVG. The ADC is to be governed by a board of four endocrinologists, one from each participating hospital. • The total number of patients from VUmc and AMC to be transferred to the new ADC is

estimated to be around 1.250, with revenues estimated to be € 585.899,-. • The revenues of the AMC and VUmc will not be sold to the ADC.

• Profit or losses up to 5% from current revenues would be absorbed by MC JVG.

• Salaries of contracted VUmc, AMC and OLVG healthcare providers will either be based on the amount of delivered care, or on a fixed fee.

• Concomitant specialist care will be delivered and paid for by the VUmc, AMC, OLVG when care already commenced before the start of the ADC.

• Concomitant specialist care for new diabetes patients at the ADC, as well as care delivered by specialist nurses and dieticians, will be delivered and paid for by the ADC.

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Timeline

Due to legal restrictions pertaining further collaboration between the VUmc and AMC, a result from the planned merger of both hospitals, up to the summer of 2017 no further action in the

development of ADC was undertaken.

It was in the autumn of 2017 that prof. dr. Mark Kramer, member of the board of directors of the VUmc, told me about the ADC. We both felt that the ADC would provide an interesting opportunity to put the ideas of value-based healthcare into practice:

1. Porters’ idea of reorganizing healthcare with the interest of the patient instead of the physician at heart would best work for multidisciplinary diseases, such as diabetes.

2. The development of a single focus clinic with extensive expertise in the team-based management of diabetes leads to efficiencies and greater patient satisfaction. Quality and patient engagement increases when focus is on value instead of volume (Porter, 2006).

3. The concepts of value-based healthcare help to control the disease more quickly and lead towards prevention-based interventions (NEJM Catelyst, 2017)

Mark Kramer specifically asked me to explore how theory could be turned into practice, and was further interested to know what value proposition the ADC should have. I personally was interested to find out what business model for the ADC, and, foreseeing that more independent practice units such as the ADC would develop in the near future, what corporate strategy the VUmc should use to stay on control, still maximizing the benefits of concentrating care in separate business units

It was in the autumn of 2017 that the planning and roll-out of the ADC re-commenced, and I became actively involved in the process, writing this thesis.

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Framing

To answer the research questions posed in this thesis, it is important to explain the principles behind value based healthcare first. The importance and relevance of a business strategy and a business model will then be explained, backed by evidence from the literature that a well-designed business strategy and business model improve results. Lastly, the relevance of corporate strategy will be discussed.

What is value based healthcare?

Competition improves value for costumers, that is the quality of products or services relative to their price (Porter, 2006). Innovation drives quality improvement: new ways to add value reduce prices, and improves customer satisfaction (Bohmer, 2009). Firms adding additional value prosper, whilst firms that offer poor value, poor quality, or high costs go out of business. Competition based on value thus benefits capable firms and consumers ànd is thus positive-sum. Many, however, think of competition as a battle to divide a pie, with some getting a bigger, and many getting a smaller slice of the pie. This form of competition is zero-sum: no value is added (the pie is not improved), and competition only determines how value is divided. Often, zero-sum competition degenerates to negative-sum competition, since competitive processes increase costs whilst offsetting gains (Aumann, 1987).

In healthcare, competition is mostly zero-sum competition: healthcare providers struggle to divide the value, whilst they should focus on improving it.

Characteristics of competition in healthcare are: Insurers compete to capture patients and restrict choice

To capture as many patients as possible, marketing of health plans is directed at healthy, low-cost patients (e.g. Promovendum health insurance). The annual selection of a healthcare plan creates an inappropriate time horizon and undermines the value for both the patient and the health plan. Once subscribed, patients are restricted in their choice of providers, fueling the belief that providers are indistinguishable, and perpetuating poor quality and high costs (McGlynn, 2003).

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Both insurers and providers compete by restricting services

To control costs, both insurers and providers restrict access to services. The concurring micromanagement is expensive and does not contribute to value. Furthermore, the fear of consumer-driven healthcare is too simple: studies demonstrate that patients who are well informed about outcomes and effects, and can share in the decision making process, often choose more conservative, less expensive treatments (O’Conner, 2004).

Competition to increase bargaining power

Consolidation through mergers and acquisitions, from both healthcare insurers and

providers, improves bargaining power in getting a bigger slice of the pie, but only marginally improves healthcare: no advances in health care improvement are seen after the majority of mergers between large independent hospitals (Chetney, 2003).

Competition to shift costs

Costs are shifted from health plan to the patient (“eigen risico”), from hospital to physician (“anderhalfde-lijns zorg”), from insurance company to hospital (“dure geneesmiddelen”). Healthcare itself is not improved (Porter, 2007).

Competition in healthcare thus is on the wrong level. Competition should instead focus on the way medical conditions are addressed, on patient satisfaction, on outcome, and should, most

importantly, encompass the full cycle of care. A focus on the full cycle of care prevents the shift of costs and values true benefit to society, since it includes the prevention, monitoring, treatment, and ongoing management of a condition (Porter, 2006). In value based healthcare, positive-sum

competition is thus value-based competition.

A prerequisite for positive-sum competition to work is that information on outcomes is readily available to patients, health insurers, and providers. Without results information, referrals for specialty care are merely based on a referring doctor’s, or patient’s personal network. For

professionals, no stronger incentive to learn from the best is ignited by the notion one’s results are below average (Groopman, 2007).

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Strategic implications for healthcare providers implementing value based healthcare

A business strategy provides the focus an organization needs for prioritizing objectives, staying ahead of competition, and optimizing financial performance. A complete strategy reflects the firm’s

strengths, weaknesses, resources, and opportunities, and assures that the firm is aligned with the changing outside world (Meyer, 2007). The relationship between the market and the business not only needs to be aligned, it has to be verified that the customers pay for the value they receive: if above average value is created but not appropriately priced, an opportunity for profit is lost. If customers are not willing to pay for this added value, resources are wasted. Lastly, a business strategy should result in a firm that is better in delivering value than competitors. This makes customers less price-oriented, due to a strong preference for a specific firm (example: Apple).

In the past, the business strategy of any hospital was pretty straightforward: offering a complete array of services whilst keeping costs in control usually kept competitors away and let the

organization thrive. This for sure held in an era where travel was slow and expensive, medicine was in the realm of intuition, and outcomes were hardly reported (Christensen, 2009). Three strategy problems arise from the all-you-can offer business strategy:

(1) it is too broad in terms of service lines.

(2) it is too narrow in terms of strategic thinking, with unintegrated services offered. (3) the geographic focus is too localized in terms of market scope and organization of

care.

With healthcare paid for by society as a whole, with costs and competition rising, and with pledges by healthcare insurers, patient organizations, and government to disclose results, hospitals needed to change their business strategy. In the last decades, lean manufacturing, explained as the

rethinking of manufacturing and services operations beyond high-volume repetitive manufacturing became the strategic focus of many health care organizations (Holweg, 2007). Although

improvements in operational effectiveness are important to any organization, these, however, will not be sufficient in an organization that lacks a strategy to attain true excellence. A second, often used business strategy, is to target at financial viability. Unfortunately, financial outcomes are an outcome instead of a goal to target for, as illustrated by the fact that excellent revenues can mask mediocrity in serving patients’ needs. Lastly, tight adherence to practice guidelines and

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mistaken for the path to true excellence. Standardization of care, however, belies the variety of individual circumstances, and the complexity of care delivery (Herzlinger, 2006).

Imperatives for implementing value based healtcare

A value based-system will result in greater efficiency, excellent results, more patients, and higher margins. Porter describes eight imperatives to move from the old all-you-can offer strategy towards a value-based strategy:

1. Redefine the business around medical conditions

Analog to the key question “What business are we in?” in corporate strategy, healthcare providers should answer the question “What service line are we in?”. This guides thinking who the customer is, what value needs to be offer, and how this should be organized. Answering this question with a mere “diabetes” is insufficient and reflects doctor-, procedure- or institution-centric thinking.

The job to be done for a patient with diabetes is “Wanting to get well”. The accompanying value proposition involves lifelong commitment to blood sugar monitoring, healthy eating, regular

exercise, ànd diabetes medication (Christensen, 2009). The relevant business thus is a set of medical

conditions seen over the full cycle of care, and not a disease itself. 2. Choose the range and types of services provided

This means the service line through which excellence in terms of patient value can be generated. This depends on the complexity of the condition treated, the skills, technology, facilities, and the cost base at disposal of the institution, and often results in deciding what not to do.

Value-based competition thus leads to specialization in pursuit of excellence, with superior results obtained through deep penetration in the chosen field of interest (Figure 4).

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Figure 4. The Virtuous Circle in Healthcare Delivery

Source: PorterM.E. & Teisberg E.O. ( 2006)

3. Organize around medically integrated practice units

Integrated practice units (IPUs) are the value-based alternative to the traditional organization of hospitals in structured departments reflecting medical specialties (internal medicine, cardiology, anesthesiology), or shared functions (radiology, laboratory). IPUs are defined around a medical condition, not around a particular service, treatment, or test, and include the full range of medical expertise, technical skills, and facilities needed to address the medical condition over the full cycle of care (Batalden, 2002). Instead of being supply driven, IPUs are patient centric and results driven.

4. Create a distinctive strategy in each practice unit

Even within practice units, different needs of different types of patients will be served, each requiring a different strategy and value proposition (see the heading “What is a business model?”). Although differentiation might be complex, this complexity ensures alignment with the market, and

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5. Measure results, experiences, methods, and patients attributes by practice unit

Instead of being bossed around trough increasingly intrusive second guessing by governmental agencies (e.g. NZA), non-governmental agencies (e.g. Pink Ribbon), or insurance companies, providers should take the lead in collecting, analyzing, and disseminating their results (Milstein, 2004). Information needs to be compiled on the level of specific teams and individuals and should include diagnostic accuracy, patient experience, patient and expert attributes, process compliance, costs, long term outcomes, and complications.

When results are transparent, a strong message about commitment to patients and improvement is sent.

6. Move to single bills, and develop new approaches to pricing

In the Netherlands, the DOT (Diagnose behandel combinaties Op weg naar Transparantie) bills multi-visit treatment cycles on the level of medical specialties: a patient with DM can thus have ongoing DBCs at the endocrinologist, the ophthalmologist, the nephrologist, and the cardiologist. Instead of issuing separate bills, providers involved need to issue a single bill, covering the costs for the full cycle of care. This forces providers to take responsibility for the full costs of a disease, and stimulates investing in prevention and monitoring.

Capitation (“populatiebekostiging”) encompasses the unrestricted delivery of care for a fixed fee per

person per year, but puts providers into the business of risk management. It might even lead to situations where services are withheld (Porter, 2006). Capitation furthermore requires tight locoregional adherence of patients to specific capitation-based healthcare-schemes, and above all eradicates the benefits of competition among providers.

The solution to prevent providers to withhold care whilst charging bundled payments is through

billing single prices, and paying for unexpected complications at, or near cost: excessive care will no

longer be provided, a strong incentive to improve on quality is launched, and those providers aligning their practice with value will not only better serve their patients, but will also prosper as competition on value grows (Urbina, 2006).

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7. Market services based on excellence, uniqueness, and results

Instead of marketing on the basis of reputation, the breadth of services, convenience, or referral relationships, implementation of value based healthcare will lead to marketing based on excellence, uniqueness and results.

8. Grow locally and geographically in areas of strength

With IPU’s cost-effectively coordinating the full cycle of care, geographical expansion unleashes growth potential for healthcare providers. Integrated management of medical conditions in a multi-unit organization leverages expertise and efficiencies of scale. Expansion through taking over and enhancing existing facilities or hospitals may be more practical and economic than investing in new clinics, but with no primary examples of IPUs in the Netherlands, starting locoregionally from scratch can foster necessary willingness to change existing provider attitudes (Ten Have, 2013).

Providers must establish medical relationships with centers that have sufficient facilities and experience to achieve excellent results. State-of-the-art communication and videoconferencing facilities enable long-distance consultation on diagnosing, treatment and follow-up at another location. Tele-medicine has proven to be a cost efficient, valuable alternative to regular outpatient visits (Veenema, 2016).

Enablers for implementing value based healthcare

Moving towards value-based healthcare delivery is, as will now be apparent, a formidable task for providers. Porter et al. identify three enablers that facilitate this transition

1. The care delivery value chain

The value chain, originally developed for analyzing competition in business and other organizations (Porter, 1985), offers a systematic approach to analyze the process of care delivery. Numerous discrete activities that encompass a service are configured and integrated into the care delivery value chain, providing us with insight where interventions improve delivered value. The care delivery value chain thus is the blueprint for developing an IPU. The proposed care delivery value chain of the ADC can be seen in Figure 9 (discussed in more detail in the

Results

section). Considerable emphasis is placed on cross-sectional, horizontal activities: knowledge development, informing measuring, and

accessing. Although mostly straightforward, accessing refers to activities involved in contact with

patients, including visits, movements within the IPU, or tele-health. Activities not involved in creating value, such as contracting, billing and facilities management, although consuming a great deal of

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management attention, are not depicted, and should be configured to reinforce, and not detract from patient value (Beckley, 2003).

2. Systematized knowledge development

Improving outcomes is only possible when a formal process of knowledge development is instituted. This goes beyond easy accessible practice guidelines: it involves training, measuring and analyzing results, and identifying process improvements. Knowledge development is of outmost importance for positive-sum competition, and should be integrated into the process. Staff should be held accountable for this process, and compensated for time spend on process improvement and knowledge development.

3. Information technology

Information technology provides the backbone for collecting and utilizing information on outcomes, activities, methods, and costs. Investment in information technology is still substantially less in the healthcare sector when compared with the private industry (National Business Group, 2016). In 2016, VUmc and AMC invested heavily in a electronic patient record (EPD) that enables the collection of detailed information on process management as well. The EPD then transforms from a simple database towards a valuable asset in quality- and efficiency improvement. Every provider should be able to store and extract relevant data on quality and process management, and trained to do so when necessary (Porter, 2006).

What is a business model?

A business model defines how value is delivered to customers, how value is paid for, and how these payments are turned into profit (Teece, 2009). It furthermore is the design a company uses to create, use, and maintain its competitive advantage (Rademakers, 2014). The most important part of a business model is the value proposition: a bundle of attributes that reinforce each other, together creating value for the buyers (Rademakers, 2014). This is more than a single service or product: the value proposition links the market to the business system, that is the set of activities and resources that create value to the customer (Figure 5).

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Figure 5. The Strategic Business System

Source: Meyer (2007)

The process in which value-adding activities and activities supporting value creation align and link together is called the value chain (Porter, 1985). The value chain forms the core of the business model, and is supported by all means at the disposal of the organization for the performance of value-adding activities (the resource base) (Meyer, 2007).

When describing a business model, Johnson et al (Johnson, 2008) further mention the profit formula. A profit formula defines how a company creates value for itself whilst providing value to the

customer, and is thus similar to the value proposition. Although several views on the exact

composition of a business model exist (Teece, 2010), the common denominator in all is a solid value proposition, just as the need for constant adjustments to changes in customer’s needs. This is in line with Porters principles of value based healthcare, with its central focus on increasing the value for the patient (Porter, 2009).

The business model in the healthcare market

Much research on business models concentrates on the private market. The healthcare market, however, is fragmented, with stakeholders having myriad, often conflicting goals, for example access to services, convenience, patient-centeredness, satisfaction, safety, cost containment, and

profitability, (Herzlinger, 2006 and Porter, 2010). When no strategic choices are made and the actual value proposition reads something like “We will do everything for everybody”, divergent approaches co-exist, improvement lags behind and a system that is prone to gaming evolves.

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Christensen et al. (Christensen, 2008) describe three business models that are suitable for hospitals: 1. The hospital solution shop

Involved in diagnosing patients’ problems, hospital solution shops deliver value by exploiting knowledge. Experts use their intuition, training and analytical problem-solving skills to diagnose the cause of complicated, unstructured problems (e.g. analysis for fever of unknown origin by an internist). Solutions are often in the realm of intuitive medicine, with treatments needing frequent monitoring to determine their effect. Analysis of unstructured problems requires a multidisciplinary approach, whilst medicine nowadays mostly is practiced in a disconnected way. In the non-hospital sector, examples of solution shops are lawyers, consulting firms, and advertising agencies. Customers are willing to pay very high prices for the custom made services in these industries, usually through

fee-for-service payments. In Dutch hospitals, no such thing exists.

2. The value-adding process clinic

In a value-adding process (VAP) business, inputs of resources – people, material, equipment – is transformed into outputs of higher value. Work tends to be performed in a repetitive way, and economies of scale are of importance in reducing costs. Processes are not much dependent on intuition and can be organized in a flow chart. Focus on excellence can foster high quality at low costs. Pricing is per procedure or for results, and can be done in advance. Because costs and outcome are relatively predictable, value-adding businesses can guarantee their products. Examples in the non-hospital sector include car manufacturing, a restaurant, or an university (!). Examples in healthcare include orthopedic hip replacement, eye surgery, or medical specialty hospitals for cardiac surgery.

3. The facilitated network solution

The last business model comprises institutions that operate a system where customers buy and sell, and deliver and receive goods or services from other participants. The dependency between

customers is the main product delivered: network companies make money through membership, or

transaction-based fees. Non-healthcare examples include Thuisbezorgd, a bank, or Airbnb. In

healthcare, examples include USA based PatientsLikeMe.com, focusing on patients with multiple sclerosis, Parkinson’s disease, and HIV. Especially patients with chronic illnesses can benefit from a network solution to manage their disease, since solution shops or value adding process clinics are ill equipped in meeting the many demands of chronic care.

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Business model innovation

In order to fulfill the needs of the customer, business model innovation can create powerful new solutions. Current business models can either be adapted (exploited), or innovated (explored) in order to search for opportunities beyond the current business model (Rademakers, 2014). Business model innovation takes place in several steps:

1. Mapp the value pathway: A “value pathway” represents the increases (value enhancements) or decreases (value leakages) in value along each step of a process or pathway. Since

healthcare should focus on health outcomes (Porter, 2009), a hospitals’ focus should be on a patient’s journey along a disease. An example of a value pathway for diabetes is given in Figure 6.

2. Identify value leakages: When the value pathway has been mapped, “value leakages” in the current system can be identified. Leakages can occur due to a lack of awareness, lack of access to healthcare, or lack of a patient’s compliance to treatment. These represents opportunities for healthcare providers to improve value delivered, and profit.

3. Solutions and partners: Healthcare providers can develop solutions for the value leakages. They can also form alliances with partners with whom to co-develop solutions. When value based healthcare is practiced, alliances can be just as important as providing therapeutic strategies (Porter, 2009).

4. Strategic fit: When potential solutions and partners have been identified, a decision on whether to start or stop should be made. An estimate of the financial risks involved, the reputation possibly damaged, and the resources involved need to be weighed against possible gains.

5. Small scale experimenting: It is then important to start with implementing the solution on a small scale. Feedback from small experiments serves to improve and scale up, or to end unsuccessful experiments.

6. Metrics and monitoring: In accordance with Porters’ aim to improve through incremental change, continuous monitoring for efficiency and results strengthens the new business model and creates additional patient value.

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Figure 6. The Value Pathway of Diabetes

Source: EY.. Green arrows and boxes represent current value additions (improved health outcomes). Red boxes and arrows represent current value leakages. Yellow boxes represent intervention opportunities, where new approaches and business models could address the current value leakages and improve health outcomes.

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24 A.F.L. Later,

What is a corporate strategy?

When an existing company identifies opportunities outside its original industry, the company might contemplate diversification: offering a potentially lucrative product or service that gives the company a strategic advantage for both businesses. Corporate strategy thus focuses on obtaining a mix of business units (the corporate composition) that allow a company to succeed as a whole. The synergy obtained can involve leveraging of resources, aligning positions, or integration of activities (Hamel, 1993), and includes advantages in operational coordination, avoidance of transaction costs, increase in bargaining power, learning curve advantages, economies of scale, or integrated management (Mahoney, 1992).

The development of IPU’s such as the ADC, fits into this picture with the corporation (VUmc, AMC, OLVG, JvGC) offering care for diabetes patients at high efficiency and quality in a separate business unit. When the added value of a new business division needs to be determined, analysis of its value chain can determine whether it contributes to the overall business strategy (Porter, 1985).

How can different business units best be managed?

The first question that needs to be answered in order to determine what management style best suits the corporate configuration is whether the different business units operate with only limited synergy (the portfolio perspective) or with maximal synergy (the integrated organization perspective). These concepts are depicted in Figure 7.

Figure 7. Portfolio organization perspective versus integrated organization perspective

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25 A.F.L. Later,

The portfolio organization perspective provides a management style where the business unit operates relatively independent from the corporation. It can foster its own goals, with control from the corporation focused on financial performance. This creates business units that are highly responsive to changes in market circumstances: no prior permission from the corporation is needed when the business unit wants to change its strategic agenda. However, the independence form the corporation also means that synergy between the corporation and the business unit is less exploited. The integrated organization perspective then maximally exploits the advantages of synergy, assuring that valuable resources are used for the core competencies identified by the corporation (Prahalad, 1990). However, an integrated organization perspective makes business units less responsive to changes in market circumstances (Rademakers, 2014).

Standardization, centralization or coordination can be used to maximize the synergies between two different businesses, with management exerted through a central, top-down management style, or through cooperation. The latter is most effective in organizations where a strong common strategic vision is shared and often results in inter-firm cooperation, instead of inter-firm competition. A

strategic control style combines both management styles, with centrally coordinated advantages of

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26 A.F.L. Later,

Results

With the theoretical framework described above, we are now apt to answer the questions on strategic management, costs, and revenues of the ADC.

How should care at ADC be organized when the principles of value based healthcare

are to be implemented?

The ADC in essence is an integrated practice unit, focused on the full cycle of care for patients with one medical condition: diabetes mellitus. The following recommendations on the organization of the ADC can be given:

Organization of the integrated practice unit

In the ADC, a multidisciplinary team consisting of doctors, nurses, dieticians, psychologists and support members work in a joint effort to maximize and measure the outcomes of each individual diabetes patient. Care of each individual patient is overseen by a care manager, who coordinates care throughout the whole cycle of care and is the primary responsible in addressing questions from the patient. All planning and administrative tasks for all care providers are to be organized in one

planning team.

Standardized care paths, e.g. age specific type 1 DM with/without complications, or type 2 DM

with/without complications, guide both patients and the providers through all steps required to obtain maximum value.

The ADC is to be organized as an independent practice unit, where

multidisciplinary care for uncomplicated type 1 and type 2 diabetes,

complicated type 1 and complicated type 2 diabetes, and newly

diagnosed patients is offered through patient centered, standardized

care paths coordinated by a case manager. Lifestyle- and

self-management is facilitated through e-Health solutions. Real-time, IT

facilitated cost and outcome management ensures competitive and

efficient high quality care. Satellite clinics and an affiliates program

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27 A.F.L. Later,

Newly diagnosed patients will be guided through an intensive treatment care path that lasts 8 weeks, where a multi-disciplinary team together with the patient develops an individual care plan. Focus is knowledge and skills that enable the patient to self-manage the disease. After this intense treatment, care involves regular check-ups every 3 month. Patients are encouraged to actively participate in the management of their care, thus increasing responsibility and self-management skills. Patients further receive additional support through e-Health (e-mail, video-consultations, telephone, app), and a 24/7 telephone service is available for emergency or semi-emergency questions.

Choose the range and types of services provided

Initially, the ADC needs to focus on acquiring a reputation as the referral center for diabetes care for adults in Amsterdam. This starts with care for patients with uncomplicated type 1 and type 2

diabetes: current patients from VUmc, AMC, and OLVG will be transferred to the ADC, located at the MC JVG. After 6 months, new diabetes patients referred to either hospital will be directly transferred to the ADC, and the ADC becomes the sole care provider for these patients.

Since it is policy to reallocate care for uncomplicated type 2 diabetes patients to the primary

physician, care for this patient group will diminish. Instead, the ADC can market itself as the expertise center where newly diagnosed type 1 and type 2 diabetes patients can get extensive coaching and

support to incorporate the new lifestyle. Once the disease has been adequately controlled, and the

patient sufficiently coached, and enabled to self-monitor the disease, the patient can be referred back to the primary physician for monitoring through 4-annual visits and checkups.

The care for complicated type 2, and type 1 diabetes patients is the second target market for the ADC. Here, care involves the full cycle of care and distinguishes itself from the usual care provided by (university) hospitals through the implementation of value based healthcare, easy access

communications, dedicated personal care coordinated by a single care manager, and a focus on long term outcome.

The two business strategies that can best be employed for both uncomplicated type 2, and complicated type 2 and type 1 diabetes will be explained later this paragraph.

Measure outcome and costs throughout the cycle of care.

Quality of life is just as important as disease specific outcomes, since maximization of value for the patient involves more than obtaining near perfect glucose management. Patient related outcomes include PROMS, time to recover, negative effects of the treatment process, and long term outcomes, including the incidence of chronic complications. Patients and referring healthcare providers are

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28 A.F.L. Later,

actively asked for their opinion on, and experiences with the ADC, at least yearly. This also provides for an opportunity to monitor for complications not elsewhere reported.

Costs are monitored bottom-up, real-time and involve all relevant costs, including provider costs, materials, medications, and housing.

Move to single bills and new approaches to pricing

New approaches to pricing will be discussed in my answer to the second sub question, What new

ideas to pay for the new business model will suit the ADC? Development of a new IT platform

In order to measure, analyze, and improve outcomes, a sophisticated patient information system needs to automatically gather pre-specified data on clinical metrics, patient attributes, and costs. The system needs to easily communicate with patient information systems in use at the four

collaborating hospitals, and possibly with other healthcare providers as well. The data thus obtained should not only improve current treatment decisions, but can also be used to persuade healthcare insurers on the benefits of value based medicine. Automatic data gathering is of outmost

importance, since additional administrative tasks for care providers distract them from their job-to-be done (Kesner, 2009).

An extended IT platform can also fast- feedback care providers in adherence to treatment regimes, complex care issues, or efficiency and benchmarking (Porter, 2007). Anonymized, data on individual performance can provide even stronger impulses for quality improvement than traditional

performance measures (Haslam, 2004).

In order to enable efficient e-Healthcare, integration of a real-time dashboard for the individual patient, displaying information on trends, goals, planning and lab results, should be enabled. An example is ther@piemail from Diabeter (Figure 8).

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29 A.F.L. Later,

Figure 8. Example of Efficient e-Healtcare

Source: Diabeter (2016)

Here, the patient is actively involved in his or her treatment regime, has 24/7 access to measured results, and gets immediate feedback on changes in his or her current condition.

Grow locally and geographically in areas of strength

Cooperation with the four affiliated hospitals enables regional expansion of services of the ADC. The transregional reputation of both the VUmc and AMC guarantees expansion in other areas of the Netherlands: long term investments can include opening satellite clinics in Zuid-Holland or Utrecht. The proven concept of value-based-healthcare, and the associated positive results in both the clinical, and the quality of life domain, will guide marketing strategies for promoting these clinics. It is however of paramount important that continuous efforts are undertaken to cooperate with other (university) hospitals, diabetes clinics (Diabeter, focused on juvenile diabetes care), and primary physicians. An affiliates program, where cooperation with care providers is priced through a fee-for-service, not only strengthens the position of the ADC, but furthermore enables access to new patients and clinical data.

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30 A.F.L. Later,

What business model best serves the new ADC when the principles of value based

healthcare are to be implemented?

In able to answer this question, it is important to recapture some characteristics of type 1 and type 2 diabetes, as displayed in Table 1.

T

ABLE

1. C

HARACTERISTICS OF TYPE

1

AND TYPE

2

DIABETES

Type 1 diabetes Type 2 diabetes

Cause • Lack of insulin • Resistance to insulin

Age of onset • Usually young • Usually older

Diagnosis • Straightforward: antibodies directed towards the pancreas in > 85%

• Difficult, multifactorial, possibly genetic, in the realm of intuitive medicine

Treatment • Insulin, according to strict algorithm.

• Intuitive, trial and error, oral medication and insulin Prognosis • Long term effects depend on

strict glucose management • Lifelong insulin dependence

• Long term effects depend on strict glucose management • Healthy lifestyle might reduce

need for medication

For the initial care for uncomplicated type 1 diabetes patients, the value added process business model seems most suitable. Since the diagnosis can rapidly be made, and treatment consists of the administration of insulin according to a (initially general applied, later personally fine-tuned) algorithm, the advantage of applying this business model are economies of scale, exploitation of expertise, and quality improvement through protocol adherence.

Care for uncomplicated type 1 DM should be addressed in a value added

process clinic, whilst uncomplicated type 2 DM patients are best treated

in a hospital solution shop. Complicated type 1 and type 2 diabetes are

best served in a value added process clinic, with lifestyle changes

supported though a network solution business model.

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31 A.F.L. Later,

For care for uncomplicated type 2 diabetes patients only one business model applies: for the diagnosis and the development of a treatment regime, a hospital solution shop model best fits with the intuitive character of the disease. Payment is on a fee-for-service basis, and can involve different procedures and treatments, all depending on the underlying cause. Since no long term commitment to this patient group exists (they will be transferred to the care of their primary physician after a treatment plan has been designed), a fee-for-service treatment with strict adherence to a pre- specified treatment duration (3 months for diagnoses, development of a treatment plan and patient education) ensures control of costs.

Complicated type 2 diabetes and complicated type 1 diabetes provide a strategic challenge. This patient group benefits from a multi-disciplinary approach, but also from strict protocol type work to ensure the prevention of further complications. Diagnosis is no longer a focus, it is prevention of further damage that needs to prevail. The advantages of a value added process clinic business model are therefore most relevant: close collaboration of care takers according to a strict plan, tight follow-up of appointments with the patient and providers, and closed feedback on changes in treatment regimes are best guaranteed in this type of business model. Pricing is on value, in this case prevention of further aggravation of secondary complications and HbA1c management.

Of importance to both type 1 and type 2 diabetes is the management of a lifestyle that incorporates the care for diabetes in daily practice. For type 2 diabetes, this involves daily exercise, (sometimes) weight loss, an a healthy, balanced diet. For type 1 diabetes, continuous alignment between insulin administered and glucose metabolized warrants in depth knowledge and understanding of caloric intake and physical needs. Both forms of diabetes, whether they are complicated or not, can benefit from services like exercise, weight reduction, or educational programs offered through a network solution business model. Services can be channeled on the internet, offered in daily or weekly classes and monitored through regular checkups or a patient dashboard. Payment is through a subscription, where a monthly fee entails the patient to unlimited access.

In conclusion, it is thus important to make a clear distinction between the diagnosis and

development of a treatment plan of uncomplicated type 1 and type 2 diabetes, and the care for complicated type 1 and 2 diabetes. These modalities require different business models, with concomitantly different organization of care.

Since management of diabetes, including the prevention and monitoring of secondary complications, overlays both types of diabetes, a network solution business model can best be employed as a separate, lifelong service to all diabetes patients.

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32 A.F.L. Later,

What should the value chain of the ADC look like?

Construction of a value chain requires judgment on management of the condition itself, and the boundaries of the care cycle: is a weight reduction plan for patients at risk of developing diabetes for example to be included in the value chain of the ADC? These judgements should therefore be made in a team, in order to represent different views on these matters.

Care for patients with diabetes requires different sets of care delivery activities, such as monitoring and treatment of co-occurring vision, renal, heart, vascular, and other conditions. In order to maximize the gains derived from delivering integrated care in the IPU model, it is important to treat these activities as components of the practice unit. Practice unit boundaries need not, and should not, be mutually exclusive from the point of specialties and medical problems (Porter, 2006). The granularity of the value chain depends on the level of detail at which the analysis is performed. Here, a level is chosen that allows us to understand the overall cycle of care, with all important groups of activities represented. Figure 9 thus provides an overview of the full diabetes care cycle, without attempting to capture all relevant details. Capitations in blue mean activities or services offered at the ADC. Care begins with prevention, focused at patients at high risk. Screening and prevention should be part of excellent primary care. In the Netherlands, prevention takes place in the practice of the general physician (GP). Since a substantial number of patients with diabetes is undiagnosed, the ADC might offer services to GP’s that are related to diagnosis and prevention of diabetes. For now, I treat these activities as mostly outside the scope of the ADC.

It is important to understand that the care cycle of diabetes mellitus can be highly iterative: as the disease evolves, new measurement and diagnosis becomes necessary, and new treatment plans may be necessary. Adjustments to the original care cycle are then needed.

The proposed value chain for the ADC is depicted in figure 9. The design

of the value chain is a team based process, where choices for the in- or

exclusion of specific care should not be dependent on boundaries

resulting from organ- and doctor centered thinking.

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33 A.F.L. Later,

Figure 9. The Care Delivery Value Chain for Uncomplicated Diabetes

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34 A.F.L. Later,

The care delivery value chain should also be structured to accommodate the fact that changes in diabetes management are to a large effect the result of seemingly unrelated treatments: the use of corticosteroids, scheduled operations, admissions for other health problems etc. all give rise to changes in glucose management. Anticipation on these side effects, and managing their

consequences, is an important aspect of the value chain and warrants close collaboration, and swift exchange of information with other health care providers.

What corporate strategy best suits the VUmc when care is to be organized in

independent practice units?

The board of directors of the VUmc understood that managing care in the traditional way, through traditional physician centered, organ specific departments, is inefficient, does not serve the interest of the patient, and is ineffective in maximization of patient value. The decision to provide care for diabetes patients in an independent practice unit is visionary and might provide a blueprint for other IPU’s to be developed. However, for the VUmc it is important to stay involved in the management and coordination of the IPU ADC: VUmc care providers will work for the ADC, patients from the VUmc will be treated in the ADC, and revenues from the VUmc will be transferred to the ADC. How should the VUmc manage the ADC, or similar IPU’s when they are developed in the future?

With synergy over responsiveness seen as a desired outcome, the integrated organization perspective seems best suitable to the VUmc and the ADC. Critique might encompass that this results in less responsiveness to changes of the market. The tightly related business composition of the VUmc and ADC, the focus on synergy in terms of resources, activities and positions and the interdependent nature of both businesses make market responsiveness less of a priority here. The strong common strategic vision shared between both VUmc and ADC favors a cooperative management style. When the ADC has proven itself as a new, innovative care provider, a strategic control style might be chosen, with a focus on partially centrally controlled and negotiated synergy.

Exploiting the synergy between both the VUmc and ADC, the VUmc

should use an integrated portfolio perspective, exerting a cooperative

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35 A.F.L. Later,

What revenues will be lost for the VUmc when care for uncomplicated diabetes

patients will be transferred to the ADC?

To answer this question, billing information for health insurance companies of the VUmc of 2015 was analyzed, since information on the year 2016 was not yet available. Raw data can be reviewed in appendix C. For an estimate of the revenues that will be lost when care for diabetes patients will be transferred from VUmc to ADC, it is important to understand that 4 types of diabetes care are billed to insurance companies:

o Diabetes without secondary complications (DBC code 221) o Diabetes with secondary complications (DBC code 222)

o Diabetes requiring continuous insulin administration (DBC code 223) o Gestational diabetes (DBC code 224)

Since healthcare for type 1 and type 2 diabetes mellitus encompass different business models, it was important to understand what number of patients were treated for both types of diabetes.

Unfortunately, as can be seen from the above mentioned DBC codes, no distinction between type 1 or type 2 diabetes is made in DBC billing information. The percentage of patients diagnosed type 1 DM in total therefore had to be estimated to be around 55%.

Since the ADC initially will focus on patients with uncomplicated DM (DBC code 221), the latter three types of diabetes care will not be included in the analysis. Patients with uncomplicated type 1 diabetes treated with continuous insulin therapy, a group of patients that in the future might be transferred to the ADC, encompasses 59 patients, with revenues of €52.153,05.

Table 2 displays the total number of patients treated for uncomplicated diabetes in the VUmc in 2015. Also displayed are the number of new patients, treated for the first time at the VUmc in 2015.

Revenues for uncomplicated diabetes encompass a mere €375.000,-at

approximately €21.000,- profit. No distinction between type 1 and type 2

diabetes can be made on the basis of the currently available billing and

cost information.

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36 A.F.L. Later,

The number of visits is displayed in the rows, and gives an estimate of the intensity of care. Standard diabetes care in the Netherlands recommends at least 4 visits every year to either a trained specialist nurse, a general physician, or an internist. From the numbers it should therefore be concluded that the majority of uncomplicated diabetes patients receive additional care from either the specialist nurse, or the general physician.

T

ABLE

2. U

NCOMPLICATED DIABETES CARE IN THE

VU

MC IN

2015

Number of patients New patients Price charged Revenue

1-2 Outpatient visits 1.382 82 € 201,21 € 278.072,22

3-4 Outpatient visits 64 9 € 507,72 € 32.494,08

> 4 Outpatient visits 112 11 € 576,98 € 64.621,76

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37 A.F.L. Later,

Table 3 displays the costs for the care for uncomplicated DM patients.

T

ABLE

3. C

OSTS FOR UNCOMPLICATED

DM

CARE IN THE

VU

MC IN

2015

1-2 outpatient visits (average: 1.28) 3-4 outpatient visits (average: 2.49) > 4 outpatient visits (average: 4.34) Outpatient visit € 47.07 € 91.58 € 159,62 Chemistry € 85,76 € 157,11 € 189,76 Imaging € 14.34 € 28.43 € 79.56 Dietician € 35.32 € 65,56 € 72,41 Consultation € 11.34 € 34.01 € 56.98

Total costs per patient € 193,83 € 376,69 € 558,33

Total costs/year €267.873,06 €24.108,16 €62.532,96

Net profit €10.199,16 €8.386,64 €2.088,80

Since the raw data contain all costs on tests performed in this patient group, an estimate had to be made how many tests on average were performed. Sometimes, tests that had been ascribed to the DBC diabetes seemed unrelated to the diagnosis and management of DM and were therefore censored. Other procedures only rarely occurred and were therefore omitted as well. Costs of the consultation involved the costs of a 15-30 minute consultation from an internist: new patients were assigned 30 minutes, patients previously treated 15 minutes. Chemistry involved laboratory tests performed at a consultation. These costs are much more expensive than initially expected, but the true costs of a chemistry test in an university chemistry laboratory are probably much higher when compared to an ordinary chemistry laboratory elsewhere: the charged price of a test performed in a university facility covers the (sometimes very high) costs of highly specific, less often performed tests and procedures and includes an additional component for top end infrastructure and personnel. It was, however, not possible to get to an estimate of the true costs of an ordinary, often performed test in diabetes care, but it is my estimate that the true costs are about 60% less from quoted here. Costs for dieticians were another hurdle: dieticians charge for every 10 minutes consultation, and an intake takes 45 minutes at least. Since most new patients are referred to a dietician, costs of

consultation of a dietician consultation were considerable. These costs can dramatically fall when charged on a per patient base. Consultation otherwise is specified as well and involves consultation of for example a cardiologist, nephrologist, or other specialist related to monitoring for secondary

The Amsterdam Diabetes Center

1

A.F.L. Later,

The Amsterdam Diabetes Center

2

A.F.L. Later,

Executive Summary

3

A.F.L. Later,

Contents

4

A.F.L. Later,

Introduction

5

A.F.L. Later,

6

A.F.L. Later,

Case Description

The Amsterdam Diabetes Center

Clinical background: diabetes

7

A.F.L. Later,

Rationale for a new diabetes clinic

8

A.F.L. Later,

9

A.F.L. Later,

Mission and vision of the Amsterdam Diabetes Clinic

10

A.F.L. Later,

The business case of the ADC

11

A.F.L. Later,

Timeline

12

A.F.L. Later,

Framing

What is value based healthcare?

13

A.F.L. Later,

14

A.F.L. Later,

Strategic implications for healthcare providers implementing value based healthcare

15

A.F.L. Later,

Imperatives for implementing value based healtcare

16

A.F.L. Later,

17

A.F.L. Later,

18

A.F.L. Later,

Enablers for implementing value based healthcare

Results

19

A.F.L. Later,

What is a business model?

20

A.F.L. Later,

The business model in the healthcare market

21

A.F.L. Later,

22

A.F.L. Later,

Business model innovation

23

A.F.L. Later,

24

A.F.L. Later,

What is a corporate strategy?

How can different business units best be managed?

25

A.F.L. Later,

26

A.F.L. Later,

Results

How should care at ADC be organized when the principles of value based healthcare

are to be implemented?

The ADC is to be organized as an independent practice unit, where

multidisciplinary care for uncomplicated type 1 and type 2 diabetes,