A short overview of Value-Based Healthcare

A need for change

Healthcare costs have gradually increased and inexorably, representing a significant burden on countries’ health systems, for their economies and, consequently, the global economy. This constant increase in Healthcare costs is due in part to increased life expectancy, but also to technological development and the consequent availability of new forms of diagnosis and treatment.

However, it is also known that some of these costs will result from inappropriate care, excessive variation in clinical practice, errors, and even fraud. Studies at the global level show that at least 20% of health expenditure has no beneficial impact or added value for patients, i.e., it is wasteful.

Across the world, Healthcare systems deal with rising costs and asymmetric quality, despite the hard work of well-meaning and well-trained clinicians and investment in infrastructure. Over the past 20 years, different management techniques have been employed to address these challenges: evidence-based decision-making (to ensure that only interventions with strong scientific evidence of cost-effectiveness were applied), improved quality of care (to improve health outcomes), and the cost reduction alone. Although necessary, all these techniques, which showed a moderate impact, proved to be insufficient, considering cost growth in the Healthcare sector. This requires a new approach to the health system, a new way of thinking that translates into better, more accessible, and more sustainable Healthcare services.

Value-based Healthcare

Michael Porter and Elizabeth Teisberg, from Harvard Business School, were the early-thinkers of the concept of value-based healthcare (VBHC). They introduced a value agenda, suggesting a shift from a supply-driven health care system organized around what physicians do and resources spent, to a patient-centred system organized around what patients need. Porter and Teisberg suggested moving from a focus on activity to focus on outcomes. This model drives for the integration of health and care, in the way that value to the patient should consider outcomes measured by all providers in a full cycle of care. As Sir Muir Gray later explains the concept of value, in a medicine perspective: “Obsessional improvements in quality and safety continue to be important, but even those meritorious activities must add value, not simply improve performance” [4].

In a simple equation, Porter represents value as the solution to restructure the Healthcare system. VBHC seeks to increase the value that is extracted from available resources, achieving the best health outcomes for the patient, at the lowest possible cost. In simple words: how much health can we buy with each dollar that is spent?.

Thus, VBHC stands out as a supply-driven Healthcare system and, therefore, guided by the activity of health professionals and remunerated by an act, to a system centred on the individual and organized in the surrounding that they need. This means that, instead of evaluating health outcomes by the volume of services provided (e.g. number of surgeries, number of visits, number of hospital stays) these are measured by the final results in the patients’ health: measured clinical outcomes and also outcomes that are perceived by patients (the so-called patient-reported outcomes).

The whole paradigm change reinforces a patient-centred approach to Healthcare, that would replace the institutionally focused payment systems, which promote fragmentation in the delivery of care, by integrated care reimbursement models.

Michael Porter’s value-based healthcare was definitely a kick-off to bring the concept of Value of Healthcare to the discussion, among healthcare professionals and other stakeholders. The concept is evolving and is being discussed differently within various communities and health systems. In Europe, Porter’s model has been discussed as short for the scope of countries that are committed to universal health coverage.

Value(s)-based Healthcare

Sir Muir Gray has led a discussion on the need to adjust the original thinking of VBHC, led by Michael Porter, to Universal Health Systems. Like in most European countries, universal healthcare systems have explicit and legally required commitment to cover the needs of all its inhabitants within a finite budget. Sir Muir Gray proposes a link between value-based healthcare and population healthcare. In addition to this whole-patient management of Porter’s model, a value-based evaluation of healthcare shall include broader population health measures, where patients are citizens grouped by similarity of needs. As he described: “The context is different in countries where resources are finite and controlled and where in addition to waste there is a need to assess value by estimating the opportunity cost, perhaps better called the opportunity lost because if resources are used on low value activity it is not the taxpayer or the insurance company that suffers, it is other patients denied higher value interventions. Even if an effective intervention is delivered at high quality without waste, it may still represent low value if greater value could be achieved by using that resource to treat another group of patients.” [6].

As a solution, Sir Muir Gray proposed a Triple Value healthcare model which has been implemented in the NHS England RightCare programme to face the challenges of sustainability, equity and innovation in universal health systems. This model addresses value in the three following levels:

Personal value (at the level of Patient), i.e. ensuring that each patient’s values are used as a basis for decision-making. This involves not just measuring the patient experience but also a preference-based informed decision.
Technical value (at the level of Intervention), i.e. ensuring that resources are used optimally for a given condition.
Allocative value (at the level of Population), i.e. ensuring that the resources are allocated in an optimal and equative way to serve populations.

In this triple value model, the clinician is not only responsible for maximizing the outcomes for a specific patient with the least use of resources, but also for preventing inequity related to age or other social factors.

The Expert Panel on effective ways of investing in Health (EXPH) (2019) takes a further step and suggests the Quadruple Value model, to underpin the solidarity-based healthcare systems. In this model, a forth value is added to the previously described triple-value model:

Societal value, i.e. ensuring that resources that are allocated promote social cohesion, based on “participation, solidarity, mutual respect, and recognition of diversity”.

The concept of Value(s)-based Healthcare is suggested by EXPH as a wider perspective of value; in particular, as a framework for European welfare states with a common goal for health systems to be more effective, accessible and resilient.

Worldwide initiatives

The transformation proposal to VBHC, introduced thirteen years ago is progressing at an increasing rate. Some organizations, such as the Cleveland Clinic in the USA, Schön Klinik in Germany, the Karolinska Centre in Sweden, among others in the US and Europe, have initiated relevant changes in the implementation of a value-creating agenda for the patient, and the results have been worthy of registration.

ICHOM was created with the purpose of standardizing outcomes collection to support VBHC changes. By working with relevant Healthcare stakeholders from many different countries in the world, ICHOM has already released dozens of standard sets for specific and worldwide relevant clinical conditions. These standard sets are available on ICHOM’s website (www.ichom.org) to support Healthcare providers in implementing the VBHC transformation. They suggest clinical pathways centred on the measurement of clinical and patient-reported outcomes in a standardized way. In spite of the limitation to not consider realistic multimorbidity conditions, these disease pathways are increasingly engaging more healthcare providers in the implementation of health outcomes measurement.

OECD is also taking a position in VBHC context, pointing out the problem of wasting and the need for health systems that are person-centred and promote high-value care. As claimed by the Secretary-General Angel Gurría, in the 2017 Health Ministerial Meeting with the theme: The Next Generation of Health Reforms , putting people at the centre demands “asking patients to identify outcomes that matter to them, such as their quality of life and functionality after medical care”. The OECD is developing a Patient-Reported Indicators Survey (PaRIS)with the aim of publishing internationally comparable indicators of patient-reported experiences and outcomes. These outcomes will illustrate the real value of health spending, focused on patients with one or more chronic conditions, who are living in the community and who are largely treated in primary care or other ambulatory care settings. PaRIS already started to discuss instruments, definitions and data collection strategies in three areas: hip and knee replacements, breast cancer care, and mental health care.

The Economist Intelligent Unit (2016) published a portrait of the trends of VBHC in Europe. It includes a collection of reports describing the laying foundations for VBHC in different European countries, based on research and interviews to experts. In resume, this report enumerates the following key findings:
(i) cost-effectiveness measures remain controversial and are being expanded from a narrow focus on pharmaceuticals and technology to the broader components of care;
(ii) data sharing is required to get a greater scope of HTA;
(iii) pricing innovation needs collaborative work within governments and industry;
(iv) access to healthcare must be addressed.

— About the author —

As CEO, Ana Rita is the scientific head of VOH.CoLAB, developing strong collaborative and multidisciplinary networks with companies and academia to implement real-world pilots with the full engagement of practitioners and patients, validating tools and methods and leveraging the healthcare transformation and citizens’ quality of life.