VALUE-BASED HEALTHCARE GLOBAL EVOLUTION PERSPECTIVES

The healthcare industry is buzzing with the term ‘value.' In part, due to changes in government policy (e.g., the Medicare Access and CHIP Reauthorisation Act/MACRA or the Most Economically Advantageous Tender/MEAT procurement policy in Europe), a growing number of international stakeholders are starting to get behind the need for a value-based approach to healthcare. While many still debate the exact definition of value, most agree that it requires us to look at outcomes relative to costs.

If you take Harvard Business School professor Michael Porter’s view, you define value as the outcomes achieved relative to the cost of achieving those outcomes. In mathematical terms:

Value = Outcomes / Cost

Outcomes are defined as the results that matter most to the patient — the one true 'consumer' in healthcare. Cost is defined as the total costs of developing and delivering healthcare, rather than charges or prices.

THE STRUGGLE TO UNITE FOR VALUE

While VBHC is conceptually simple, its implementation is not. Accelerating real-world execution of VBHC over the past few years has primarily involved providers utilising patient-centred outcomes for quality improvement activities, or — less frequently — payers developing outcomes-based payment models. Most successful examples of these initiatives have come out of Europe and the United States. Supporting these inspiring but somewhat disparate initiatives have been a few large-scale international efforts, aiming to provide common frameworks and define standards for widespread change across the global health care ecosystem. Three well-known examples are:

1. The International Consortium for Health Outcomes Measurement (ICHOM)
A global VBHC non-profit co-founded by Professor Porter at Harvard Business School, the Boston Consulting Group, and the Karolinska Institute. ICHOM believes that the routine measurement of outcomes is the first step towards VBHC. They are developing globally standardized, patient-centred outcomes datasets for different medical conditions and patient cohorts. The goal is to generate outcomes data (the numerator of the value equation) that can be used for value-enhancing cost reduction, and for international benchmarking, learning, and improvement.

2. The World Economic Forum’s Value in Healthcare project
A five-year, global, multi-sector effort to identify successful case studies and develop VBHC frameworks for healthcare stakeholders around the world. For example, one pilot project is tackling the topic of multi-stakeholder cooperation by bringing together 40 healthcare stakeholders (including payers, providers, patient groups, government, and medtech) to help manage heart failure.

3. The Economist Intelligence Unit’s global VBHC assessment
A 2016 VBHC readiness assessment conducted across 25 countries, against four domains:

• enabling context, policy and institutions for VBHC
• measuring outcomes and costs
• integrated and patient-focused care
• outcomes-based payment models

Overall, the study concluded we are still in the early stages of VBHC transformation globally. By providing a common lens for VBHC readiness, however, it helped generate goal-oriented conversations in early markets for VBHC with ‘low readiness’, such as Latin America.

These system-wide initiatives intend to connect the dots and help healthcare systems and institutions globally navigate the journey towards value together. Since much of this is uncharted territory, information-sharing and collective learning can and will continue to be tremendously beneficial for all.

However, even with the support of these global endeavours, VBHC implementation remains a complex science that requires a significant degree of tailoring — from national systems down to the individual patient. While we are all still figuring out how to do it, it is very easy to get lost in the nuances. From cultural change in clinical practice to the reconfiguration of data systems, healthcare institutions — hospitals, payers, suppliers, and others — are required to develop value strategies that challenge deep-rooted behaviours and outdated operational norms in medicine. It requires both a revolution and a redefinition of healthcare. Many have been surprised by how long it can take to undergo such a transformation, with the journey throwing up new and unexpected learning points on a regular basis. Naturally, these tend to vary between institutions, which introduces a level of heterogeneity and uncertainty that can put some people off. Further, successful case studies tend to focus primarily on hospitals, rather than other stakeholders.

INDIVIDUAL HEALTHCARE INSTITUTIONS NEED TO TAKE CONTROL

Since my shift from focus from more advanced VBHC markets in Europe and the United States at ICHOM, to early-stage VBHC markets in Latin America at Medtronic, I’ve come to realise that systemic initiatives won’t be enough on their own. While they will continue to play a vital role in driving common frameworks, there is a need for individual healthcare institutions to independently steer themselves in the right direction — to meet systemic initiatives at the same key touchpoints. The independent nature of this is critical because every healthcare institution — like every patient — is different, culturally, strategically, and operationally. The question then, is how does one effectively wield VBHC theory (such as the 6 points offered by Porter) in the real world, without help? Many (mostly providers) have been trying to do this for years — in particular, by beginning with the generation of patient-centred outcomes data.

By examining an early-stage VBHC market like Latin America, we’ve started to learn that the answer lies in simplifying the framework and empowering individual institutions — regardless of their role in healthcare — to develop their own tailored VBHC strategies based on the same fundamental principles, keeping those principles nimble enough such that they remain relevant for everyone — to providers, payers, and suppliers.

GETTING THE SHIPS TO SAIL IN THE SAME DIRECTION

As we begin to form VBHC partnerships in Latin America, two interrelated themes continue to pop up and ultimately infuse every aspect of value-based programs with payers and providers: data and partnerships. Neither is a novel concept, but how we think about the two and apply them to VBHC transformation needs to be different.

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