VALUE-based healthcare is a significant shift in mindset; a shift to re-shaping competition to focus on generating value for patients by improving outcomes, reducing costs and enabling access across a greater degree of geographical reach.
Critics of value-based healthcare abound, as they have with almost all other phenomena that claimed to transform the fabric of healthcare systems, whether it played out in Australia or across the global stage.
We have witnessed this with many healthcare transformations that disturbed the status quo. Movements such as the clinical-governance transformation, patient-centred care, new technology, home-based care, and the current digital transformation, while firmly embedded into most health systems in the developed world today, have not been without struggle, ridicule and strong opposition.
Is there something different though, about this value-based care phenomenon that is claiming to be healthcare’s next monumental transformation, that sets it apart from all others?
The concept of “value-based care” began in 2006 with Michael Porter and Elizabeth Teisberg’s work on redefining the zero-sum competition nature of existing healthcare systems, in which gains in one area of the system arise at the expense of another, to that of a positive-sum competition framework, a win-win situation.
The basic premise was that healthcare market competition in its current state is set up in a manner that incentivises cost shifting, encourages capturing patient volumes, favours process compliance data gathering, aims to reduce costs only via a piecemeal approach (as healthcare is viewed as discrete interventions/treatments) and inevitably pushes excess costs of service provision to consumers. Cue the most recent occurrences relating to out-of-pocket costs and increasing private health insurance premiums in Australia as sobering realities.
Consider even a simple colonoscopy procedure; currently paid per procedure, encourages rapid turnover of patients and shortened procedure time. This increases the likelihood of the caecum not being adequately visualised, thereby lowers the accuracy of colon cancer diagnosis and results in a less-than-ideal outcome for the patient. Putting on a value-based lens to this scenario, and paying colonoscopy procedures based on them meeting specific indicators (such as visualising the caecum), would see an increased accuracy rate of colon cancer diagnosis and better survival rates and safer clinical outcomes at the patient level.
What is being proposed with value-based healthcare is a significant shift in mindset to re-shaping this competition to focus on generating value for patients by improving outcomes or reducing costs, or both, over the full cycle of a patient’s care.
It suggests creating unrestricted competition driven by consolidating health provider experience and expertise at the disease or condition level of the patient. It emphasises generating competition via funding approaches aligned to support integrated governance structures that deliver cohesive and coordinated care at both the individual patient and the population level. It encourages competition to achieve better results, improve patient outcomes, cover a greater degree of geographical reach and standardise high performance across regional and national levels, and not just at the local health service level.
While it sounds like the panacea we have all been waiting for, there are several basic, albeit onerous, elements needing synchronisation and harmonious implementation, which are clearly easier said than done.
Patient outcome measures and cost indicators to support value-based competition need to be identified, agreed on, monitored and shared. Interoperability standards across information technology (IT) platforms and integrated systems need to be developed, capable of analysing complex information and deriving valuable insights. Rural and regional IT infrastructure needs to be strengthened and networked. Innovations that increase value need to be actively encouraged and strongly rewarded.
Underpinning all this, national and state-based policy for generating value-based competition in the areas of funding, performance accountabilities, regulation, legislation and service planning needs to be developed.
Throughout it all, the integral players who are key to embedding successful transformations in any healthcare system, our clinicians, need to be actively supported to take leadership roles in this space. It is our doctors, our nurses and our healthcare staff who we will need to engage, involve in lobbying for change, facilitate collaboration with and consequently unite in leading the shared realisation that “value” in healthcare may not be so elusive after all.
Will doing all this guarantee a successful transition to a value-based healthcare system, or generate the improved patient outcomes, reduced costs and elimination of unwarranted variation in Australian healthcare delivery that this seems to promise?
Perhaps. Or perhaps it is just too soon to tell.
What I am certain of though, is that as healthcare influencers, there exists a need for us to take an optimistic approach to driving better value healthcare. Without a little bit of hope and a whole lot of motivation, it will be far too easy to drift towards a critic’s perspective because it all seems too hard.
What this value-based phenomenon fundamentally does is that it challenges us to think beyond any sense of complacency that our current state of activity and resource consumption are sustainable, and beyond any false sense of security that consumers will continue to remain loyal to our respective healthcare businesses. As Amazon’s founder, Jeff Bezos puts it, “customers will certainly be loyal to a business – right up until the second someone else offers them a better service”.
That is precisely what is taking place in the healthcare industry today. As value-based care gains momentum worldwide, as more and more services proudly declare their improved performance outcomes against lowered costs, and patients become increasingly cognisant of expecting better value care, we may not have the luxury of remaining indifferent any longer.
Despite what seems to be a rather insurmountable and even “radical” path that is before us, as healthcare executives we should not be indifferent or cynical to the promise of what may very well be the next greatest business transformation the healthcare industry has ever seen.
Dr Sidney Chandrasiri is the Chief Medical Officer of the Alexandra District Health Service, and Group Director of Academic and Medical Services at Epworth HealthCare.
The statements or opinions expressed in this article reflect the views of the authors and do not represent the official policy of the AMA, the MJA or InSight+ unless so stated.