Issue 33 / 26 August 2019

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.

6 thoughts on “Value-based care: the next health care transformation

  1. Marcus Aylward says:

    “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.”
    Sorry Sidney, it does sound like a panacea (or a series of motherhood statements), but I’m not sure I actually understand what any of that means.
    Seems to suggest increasing subspecialization to disease level, but then wants to be holistic at the same time. ‘Competition’ suggest a market, but then the market has to be compelled to service regional requirements too which seems like a return to command-and-control.
    Suggest reading Jeremy Sammut and his review of the Singapore Health System as a meaty starting point for a real value-based systemic change to healthcare.

  2. Kate T says:

    The link below provides a simple definition to help understand what value-based health care is as referred to in this article, and outlines the core elements underpinning how positive-sum competition can work in this context.

    https://www.vintura.com/en/life-science-consulting/value-based-health-care/michael-porters-definition/

  3. Anonymous says:

    Does the author have any evidence to support the claim that a significant number of colonoscopies fail to visualise the caecum due to excessive haste. If not, the ideas espoused in this article are worthless.

  4. E. U. says:

    Focusing on the degree of association between incomplete colonoscopies and excessive haste may be an indication one may be missing the point of VBHC presented in this article. There is a significant body of evidence linking incomplete colonoscopies to a range of causative factors. Common patient factors include inadequate bowel preparation, discomfort and intolerance, low body mass, female sex, and young age. Technical factors include diverticulosis, tortuosity, adhesions due to previous surgeries, angulation or fixation of bowel loops, and ineffective sedation (ref 14, 16, 18below). Operator factors also play a role according to the expertise of the endoscopist or technician. For example, one study showed that colonoscopies performed later in the day had higher rates of incompletion, suggesting operator fatigue to be an important factor. (Ref 19 below).
    The competency of the endoscopist is also a significant factor in determining the success of colonoscopy; the American Society for Gastrointestinal Endoscopy (ASGE) guidelines state that for trainees, 500 colonoscopies be required to consistently achieve cecal intubation in 90% of procedures. (Ref 20 below).
    In order to understand VBHC principles and its applicability to clinical scenarios it is essential to view these clinical scenarios as patient care quality metrics and link these to effective reimbursement and funding models. For examlple, the ASGE and the American College of Gastroenterology recommend a cecal intubation rate of at least 90% for all colonoscopies and at least 95% in screening colonoscopies. (Ref 5, 9 below). These high rates of colonoscopy completion for effective patient care are quality metrics tied to reimbursement, which consequently incentivises hgher diagnostic accuracy and thereby better patient outcomes
    It is important not to miss the bigger picture and key concepts as an unfortunate consequence of what may be misguided pursuits focusing on insignificant and misinterpreted details.

    Refs
    5. Rex DK, Schoenfeld PS, Cohen J, et al. Quality indicators for colonoscopy. Am J Gastroenterol. 2015;110(1):72–90.
    9. Rex DK, Schoenfeld PS, Cohen J, et al. Quality indicators for colonoscopy. Gastrointest Endosc. 2015;81(1):31–53
    14. Witte TN, Enns R. The difficult colonoscopy. Can J Gastroenterol. 2007;21(8):487–490.
    16. Anderson JC, Gonzalez JD, Messina CR, Pollack BJ. Factors that predict incomplete colonoscopy: thinner is not always better. Am J Gastroenterol. 2000;95(10):2784–2787.
    18. Dik VK, Moons LM, Hüyük M, et al. Colonoscopy Quality Initiative. Predicting inadequate bowel preparation for colonoscopy in participants receiving split-dose bowel preparation: development and validation of a prediction score. Gastrointest Endosc. 2015;81(3):665–672.
    19. Sanaka MR, Shah N, Mullen KD, Ferguson DR, Thomas C, McCullough AJ. Afternoon colonoscopies have higher failure rates than morning colonoscopies. Am J Gastroenterol. 2006;101(12):2726–2730.
    20. Faulx AL, Lightdale JR, Acosta RD, et al. ASGE Standards of Practice Committee. Guidelines for privileging, credentialing, and proctoring to perform GI endoscopy. Gastrointest Endosc. 2017;85(2):273–281.

  5. Matthew B says:

    Great article. I share your views on this important topic. My concern is that most other developed countries are well advanced in this area while Australia still lags behind trying to grasp the basics. There needs to be a coordinated response across Australia if we are to make any real impact on our health system.

  6. Anonymous says:

    Definitions of value based healthcare abound. It is worth looking at what Australia’s largest health system considers to be the definition of value in in healthcare and their efforts across a broad range of clinical conditions:

    https://www.health.nsw.gov.au/Value

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