Harnessing value-based healthcare to address challenges in global healthcare

The healthcare landscape is facing several profound issues including increasing demand and cost, workforce pressures and effective utilisation of new technology and data.

In the face of these challenges a shift towards value-based healthcare can be seen as part of the solution to all or at least some of these issues by national healthcare systems worldwide. A traditional fee-for-service model, which compensates healthcare providers based on the quantity of services rendered, is proving to be unsustainable, often leading to escalating costs and variable quality of care. Value-based healthcare, on the other hand, prioritises delivery of high-quality, cost-effective care that focuses on improving patient outcomes and overall well-being.

Value-based healthcare is capable of being implemented in both public and privately financed systems. While the concept may be optimally implemented across full cycles of care to achieve the benefits of scale, its principles can also be applied on a smaller scale in respect of individual products and services.

A key element in the successful implementation of value-based healthcare is the adoption of efficient contracting and procurement processes. These processes help to ensure that healthcare providers are incentivised to deliver better care while containing costs, ultimately benefiting both patients and healthcare systems as a whole.

In this first article, we investigate how the adoption of value-based healthcare can start to drive better healthcare outcomes, enhance patient satisfaction, and contribute to the sustainability of healthcare systems.

1. Impacting the increasing costs of healthcare

Healthcare systems worldwide face a challenge to deliver more with their resources, bearing in mind costs advancing and populations increasing and aging, with patients wanting the most advanced care. The OECD estimates that growth in health care costs is outpacing growth in GDP. Those funding their own health costs are also being hit by inflationary pressures.

In contrast to simply looking to reduce costs, value-based approaches aim to use available resources as wisely as possible.  This is not the same as cutting costs, rather value-based approaches seek to obtain best value from the available funds with a focus on how they can be best used to achieve the outcomes which matter to patients (value).

2. Focusing spend on the areas where it impacts outcomes

While costs are increasing, a scenario is emerging in which the countries spending the most on healthcare are not those achieving commensurate outcomes for this investment. In the US and UK, two examples of high income countries, overall life expectancy looks to be decreasing, and worldwide, up to $3.2 trillion of annual health spending is thought to make no contribution to good health outcomes. Conversely, countries such as Israel which have invested in different approaches to healthcare, are reported to be spending less but achieving better outcomes.

With the emphasis on best value outcomes and using reimbursement approaches which move the focus away from procedures performed, to outcomes (and value) achieved, value-based approaches are more adept at highlighting and removing waste from healthcare systems.   

3. Moving away from the spiral of ever tighter margins

With healthcare systems struggling with costs, suppliers to them are being asked to cut their own margins. Doing so is unsustainable in the longer term especially given inflationary pressures on raw materials and workforce. If suppliers leave the market in the face of this, competition will become more limited which also risks increasing cost. Value-based models typically pay providers based on the quality and outcomes of care they deliver, rather than the volume of services or devices they provide. This creates a financial incentive for providers to invest in innovation and adopt evidence-based practices that improve patient care.

4. Optimal data collection and usage

High quality data drives value-based approaches. At present, data collection across healthcare systems can be patchy with inconsistent approaches and there are challenges around both collection and sharing of data to enable it to be exploited to its full potential.

While pursuit of a value-based approach alone will not solve these significant challenges, the need for data to effectively embed the model, demonstrating where new approaches may work and evidencing outcomes, can a be a significant driver for improving data practices. Likewise, value-based approaches involve collaboration between those contracting and providing care, with engagement also with patients experiencing it. That collaborative relationship and the trust built through it may in turn be exploited to increase data transparency and sharing as well as driving solutions to improve practices. In essence creating more clarity over what delivers value in the system, and what doesn’t.

5. Helping to tackle workforce issues

Healthcare professionals are struggling under pressures which include those caused by funding and resourcing of healthcare systems, increasing patient need and demand, and shortages of staff. This can make for poor working environments, demotivation and increasing numbers of healthcare professionals experiencing burnout and leaving their roles.

Value based models can be seen to typically reduce the amount of paperwork and administrative tasks that providers have to deal with. This in turn should free up providers’ time so that they can focus on providing care to patients, spending more time with them. The intent of these models, built around the outcomes that matter to patients, is that they enable clinicians to focus on what they do best: providing care to patients.

Value-based healthcare can be a basis for incentivising new approaches such as (for example):

• Telehealth can help to reduce workload and free up time to see more patients or spend more time with each patient.
• Remote patient monitoring which can help to reduce workload by allowing monitoring of health data remotely. This can reduce the need for clinicians to see patients in person for routine matters.
• Collaborative approaches can allow providers to share workload and collaborate on care delivery more effectively.

6. Quality improvements and tackling inequalities

Through engaging all the relevant stakeholders collaboratively in a solution in an open and safe environment, in which lowest cost is accepted to no longer be the key driver, and patients are a central focus, value-based approaches enable stakeholders to work together (with aligned incentives) to find ways to improve quality of care. Together with a transparent data sharing approach, this environment in turn provides opportunities for health systems to acknowledge and address inequalities in care being received.

The case for value

To conclude, there is a strong (and growing) case for a shift towards value-based healthcare principles within national healthcare systems. As detailed above, this is driven by increasing recognition that focusing spending on areas where it delivers maximum impact and outcomes is not just financially prudent but essential in delivering better outcomes for patients and healthcare professionals alike. In addition, there is a need for healthcare systems to harness the power of technology (e.g. in health data) to drive innovation to both enhance patient care and optimise resource allocation. Value-based approaches intrinsically support this aim.

The adoption of value-based healthcare should not just be seen as a pragmatic necessity but rather an opportunity to rebalance healthcare delivery, introducing a system where quality, efficiency, and patient well-being can take centre stage.

Central to this transformation are the crucial elements of contracting and procurement, which act as the linchpin for aligning incentives and assuring the delivery of high-quality, cost-effective care. We will explore this further in the next article in this series.

For further information and support, please get in touch with one of our Healthcare Commercial experts.