Value-based Healthcare: A concept waiting to reach its full potential

August 25, 2022 by Ambika Subramanian in Actu-Real Blog

Value-based healthcare (VBH) as a concept was introduced in 2006 by Porter and Teisberg1, though facets of this concept have been around for much longer. Value-based healthcare delivery model is a framework that encourages healthcare providers to focus on quality than quantity.

A look at the different healthcare systems across the globe immediately makes it clear that there is a lot of diversity in how each of them functions. Following are some illustrative examples:

Value-based healthcare blog table no. 1

While the benefits of value-based care are known, most countries are only now looking to adopt it. The reasons for adopting VBH would vary depending on the country’s current set up. For example, countries where the government reimburses physicians/healthcare providers based on fee-for-service, may want VBH to reduce the practice of unnecessary procedures or tests being prescribed and moving away from fee-for-service. For countries with government-funded healthcare systems, may want VBH to improve quality and suitability of care.4,5

In VBH, everyone has a role to play – physicians/providers possibly have the biggest one, but also patients, employers, insurers, governments, etc. For every stakeholder, the overarching goal is to improve the value for patients – could be to improve 1 or more outcomes at the same cost, or reduce cost without affecting the outcomes, or both.6 In general, VBH is more proactive and trying to keep patients healthier, by avoiding unnecessary or ineffective treatments and focusing on more integrated effective ways of treatment.

VBH is based on 6 pillars (depicted below).6 The six components are mutually enabling each other and when adopted help bring in efficiencies, teamwork and cost effectiveness, and ultimately benefitting every stakeholder in some way.

For this system to work, every healthcare/hospital setup needs to work like a well-oiled machine, where departments work closely, have trust, and work with a common goal of patient value and satisfaction in mind. This would help systems become efficient, remove unnecessary costs, and ultimately lead to patients spending less time in hospitals and being healthier. This in turn will result in patient loyalty, patients would want to return to a set up that brings value and is coordinated. From the payer’s perspective too, it would lower the risks, as such systems inherently would try to reduce errors, re-hospitalizations, and incorrect/inefficient treatments and procedures, thereby making it cost-efficient. From the manufacture’s perspective, it would mean a fair price for the drug by alignment of prices with patient outcomes.

While value-based healthcare has something for all stakeholders, it needs alignment amongst them to ensure a collaborative promotion of the concept of health system value. For countries trying to adopt it, it would probably be a gradual process but one which promises to have huge long-term benefits.

A Glimpse of Therapeutic Value and Value-based Pricing 

Value-based pricing is mainly related to the therapeutic value (TV) of a drug – includes properties of the drug, effectiveness, and health outcomes. Values beyond clinical and economic outcomes are also included – equity, QoL for caregivers, better patient adherence, etc. These are compared with other options available, and accordingly therapeutic value is defined. Countries which have Government run healthcare system (Germany, Canada, etc.) have determined TV through health technology assessments to help with reimbursement and pricing.7

Examples of Therapeutic Value Assessment Frameworks

Value-based healthcare blog table no. 2

With the rapid advances in medical science and technology, the number of novel therapies available would further increase at a drastic rate, especially for complex or rare diseases. These highly specialized therapies would come at a high cost, considering the value they bring to patients and overall society, and the innovation cost for the manufacturer. Value or outcome-based assessments and pricing is thus becoming even more important now than ever before as more novel high-priced drugs are coming into the market. Value-based pricing models are poised to becoming a key component of financial agreements, to make such high-cost therapies affordable and accessible. 

References

1. Reinhardt UE. Health Reform: Porter and Teisberg’s utopian vision. Health Affairs. https://www.healthaffairs.org/do/10.1377/hblog20061010.000063/full. Published October 10, 2006. Accessed in July 2022.
2. International Insurance, Countries with the Best Health Care Systems in the World. https://www.internationalinsurance.com/health/ Accessed in July 2022.
3. Healthcare Systems around the world. https://www.news-medical.net/health/Healthcare-Systems-Around-the-World.aspx. Accessed in July 2022.
4. Value-based healthcare: A global assessment. http://vbhcglobalassessment.eiu.com/value-based-healthcare-a-global-assessment/ . Accessed in July 2022.
5. Christer Mjåset, MD, BA, Umar Ikram, MD, MPH, PhD, Navraj S. Nagra, MD, PhD, MS, and Thomas W. Feeley, MD. Value-Based Health Care in Four Different Health Care Systems. NEJM Catalyst Innovations in Care Delivery. Nov 2020. https://catalyst.nejm.org/doi/full/10.1056/CAT.20.0530#r3 
6. Porter ME, Lee TH. The Strategy that will Fix Health Care. Harvard Business Review. October 2013. https://hbr.org/2013/10/the-strategy-that-will-fix-health-care 
7. Laura Prieto-Pinto, Nathaly Garzón-Orjuela, Pieralessandro Lasalvia, Camilo Castañeda-Cardona, Diego Rosselli. International Experience in Therapeutic Value and Value-Based Pricing: A Rapid Review of the Literature, Value in Health Regional Issues, Volume 23, 2020, Pages 37-48. https://doi.org/10.1016/j.vhri.2019.11.008. 
8. Landmark U.S. healthcare bill sets stage for lower Medicare prescription drug costs. https://www.reuters.com/world/us/landmark-us-healthcare-bill-sets-stage-lower-medicare-prescription-drug-costs-2022-08-09/ Accessed Aug 2022.

Ambika Subramanian

15 years’ clinical research experience, including 13 years in medical writing; led multiple global medical writing projects; Authoring experience spans across regulatory writing, safety writing, and medical communication; experience of setting up robust medical writing processes.