Have you ever heard of value based healthcare? For some in health, it’s nothing more than a buzzword, others are changing a complete health system to work value based.
I think value based healthcare offers anyone in the health business ecosystem interesting possibilities to innovate: hospitals, health insurances, technology and pharma companies, governments, and universities …
Next, value based healthcare is interesting because it combines all big trends in healthcare: digitalisation, prevention, the search for quality and cost-efficiency, ageing population,…
But most of all: value based healthcare (VBHC) puts the patient in the driver’s seat. It puts the quality of life of the person in the centre and takes social, mental and integration goals into consideration.
Value based healthcare merges all actual healthcare needs into one big agenda and helps healthcare companies to decide upon their strategies and priorities.
Quality and costs in healthcare
Challenges for health systems worldwide are the same: how do we ensure quality and keep costs under control?
Costs of healthcare increase, mostly due to an ageing population, new medical developments, chronic diseases and increased demand for care.
For a long time, quality and cost-efficiency seemed irreconcilable in European healthcare: ‘low cost means low quality‘ and ‘quality requires more resources‘ used to be favourite mantra’s on both sides of the spectrum.
This has to do with culture and -probably most of all- with the health care business model. This model stimulates production to have more resources. This way, healthcare (and not health) is considered to be the product.
In value based healthcare the product is health
However, this is changing. Sustainable healthcare is on the rise: governments in Canada, UK and Asia are calling all parties to engage for it. The reason is simple: public financial resources are limited whilst technology and demand for care keep growing. Value based healthcare (VBHC) fits into sustainable healthcare.
VBHC was introduced by Harvard professor Michael Porter en Elisabeth Olmsted Teisberg in their classical work ‘redefining healthcare. Creating value based competition on results’ in 2006.
Porter and Teisberg claim competition in healthcare will not be won by either quality OR cost efficiency but will require both. They claim those companies and caregivers combining both will survive.
Competition will be won by those who make conscious choices to increase value for patients. (Porter and Teisberg)
The starting point for VBHC is the value of healthcare to the patient and the aim is to achieve maximum added value for patients: the best possible outcome in health at the most efficient cost per unit.
And the biggest value of all, of course, is good health. So health becomes the product here.
Plus, value based healthcare works with patient-reported outcomes.
Prevention, collaboration and digital health
Other ideas within value based healthcare typically are:
- a focus on the results of treatment and not so much on the provision of care itself. It’s a focus on health outcomes, which are defined as a set of results, both physical, mental and social, and throughout the whole ‘cycle of care’.
- this will lead to higher cost-efficiency: investing slightly more in certain parts of the care cycle with a higher value for the patient and slightly less in others will increase cost-efficiency.
- as a result: a great deal of attention goes to prevention for people with chronic conditions.
- value based healthcare requires more collaboration between different healthcare providers and companies. New collaborations make better health outcomes for patients possible.
- digital health is used to a much greater extent. At the very least it’s used to measure progress and results of all care providers in the care cycle.
VBHC leads to new ways of working and new products
All parties in the health business ecosystem will have to cooperate with a common goal and will:
- use techniques and tools to measure value for patients; like patient-reported outcomes
- use mutual information flows: share data, information and insights
- receive flexible financial rewards, based on pay for performance
Parties will invest in what they do the best and deliver the biggest possible value. They might choose to build new products, services or choose another business model. This is what Porter calls the strategic agenda of VBHC.
Hospitals are in the centre of the VBHC-changes. But Porter and Teisberg explore the impact for all other stakeholders in the healthcare ecosystem. What does it mean for healthcare companies, both corporate companies and startups, for example?
But don’t exaggerate
The drawback of value based healthcare can be the mere focus on numbers and data, at least when you adhere too strictly to it. That’s why some say VBHC looks like number-crunching. And why it’s only a buzzword that fits in perfectly in our data-driven times.
Of course, this is not how it’s meant to be.
Conclusion: more than a buzzword
Use value based healthcare as a guide for new healthcare business ideas and actions. Let Michael Porter and Elisabeth Teisberg inspire you to do some critical self-reflection and to build healthcare innovations.
Also, you can use many free guidelines and protocols published by ICHOM, the International Consortium for Health Outcomes Measurement. And you can collaborate with a bunch of ‘VBHC-companies’. They are at the forefront of VBHC-implementation or offer products and services to support your implementation.
Some software providers, for example, are listed on the special TechHub page of ICHOM. They offer software that makes it easy to measure outcomes, particularly patient-reported outcomes. Vendors can register their platforms there when they meet specific requirements.
This way, value based healthcare is much more than a buzzword.
It’s already inspiring many healthcare providers (hospitals as well as care organisations) and companies (lifetech, medtech, software, …) in their day to day actions. And we can expect this to go on in the years to come.
Want to read more on value based health?
- Porter, M.; Teisberg Olmsted, E., Redefining healthcare. Creating value-based competition on results. Harvard Business School Press, Boston, 2006.
- Porter, M.; Lee, M., The strategy that will fix healthcare. In: Harvard Business Review, October 2013.
- Van Herck, P.; Staelraeve, S., Go with the flow: value based zorgintegratie en zorglogistiek. Whitepaper voka health community, 2016. (in dutch)
I often use value based healthcare as a framework for business advice to dashplus customers. It helps them to have focus and choose priorities and goals.