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Principles of Value$-$Based Competition

THE ZERO$-$SUM COMPETITION of the $1990$ s and early $2000$ in the United States health care system has clearly failed. It did not produce widespread improvements in the quality and cost of delivering care, nor widen access to care for all Americans. Instead, zero$-$sum competition perpetuated inefficiency and substandard quality. It also drove up administrative costs, inhibited innovation, and resulted in alarming cost increases for patients, employers, and the government. More and more Americans are without health plans. Participants in the system have been pitted against each other, to no one's benefit.

Health care competition must be transformed to a value$-$based competition on results. This is the best way, and the only way, to drive sustained improvements in quality and efficiency. The experience in numerous other industries tells us that this transformation is possible. It also tells us that there can be stunning progress when the right kind of competition is unleashed.

Value$-$based competition on results is a positive$-$sum competition in which all system participants can benefit: When providers win by delivering superior care more efficiently, patients, employers, and health plans also win. When health plans help patients and referring physicians make benefit. And competing on value goes beyond winning in a narrow sense. When providers and health plans compete to achieve the best medical outcomes for patients, they pursue the aims that led them to the profession in the first place.

What would value$-$based competition in health care look like? It would be guided by the eight principles shown in figure $4-1.$ As rational and selfevident as these principles may seem, they do not describe the health care