Value-based care: A value proposition for patients, providers, and payors

A culture of continuous learning and improvisation, along with support from the highest levels of governance, will be necessary to establish fully value-based care. It is a long journey, but a well-developed VBC system can benefit all stakeholders by keeping the population healthy at lower costs

By ISB

Published: Aug 3, 2023 04:10:36 PM IST

Updated: Aug 3, 2023 04:15:46 PM IST

For healthcare providers, patient outcomes, quality and cost of care, and revenue generation are important considerations. A value-based model can address these. Image: Shutterstock

Value-based healthcare (VBC) is gaining increasing attention. Against the backdrop of rising global health expenditure (11 percent of the global GDP in 2020) and pressure on improving cost-efficiency, VBC offers a patient-centric solution for re-organising healthcare. Simply put, it maximises health outcomes most important to patients while controlling costs. Stakeholders in the health system have different perceptions of value based on their prioritisation of costs and benefits. Understanding the components of a VBC model and its advantages will help align the stakeholders and prepare them for the imminent transition.

For healthcare providers, patient outcomes, quality and cost of care, and revenue generation are important considerations. A value-based model can address these. Focusing on preventive care, implementing care protocols, value-based procurement, and organising care around specific disease areas (specialisation) are just some of the components of a VBC model that providers at different levels can benefit from. For instance, VBC-based physician-led or primary care-led models are incentivised to keep the population healthy, providing access to higher levels of care when required. For hospitals, implementation and adherence to treatment protocols reduce costs and ease healthcare reimbursements while having positive patient outcomes. Adopting a value-based approach to procurement which considers long-term efficiency and costs vis à vis health outcomes, results in increased savings and patient satisfaction. Additionally, value-based care can improve provider well-being, as providers are paid based on patient outcomes versus number of patients they see. Increased collaboration and teamwork, increased job satisfaction, and improved communication with patients are other benefits of a VBC model for healthcare workers.

For payors, key objectives include:

Controlling costs.
Detecting fraudulent claims and improving processing times.
Customising health plans for better reach and services.
Promoting preventive health.

A value-based system offers avenues to achieve the same. The use of innovative payment models, such as capitation, and bundled payments, help manage costs while delivering quality care. Such models nudge providers to establish a strong primary care base, deliver the best possible outcomes at the right price, and keep the population healthy and satisfied with good service and high-quality care. Individuals can be incentivised to follow healthy behaviour (like regular exercising and maintaining a healthy BMI and habits) through lower premiums and other benefits. Extending coverage to include mental health, telehealth, home care and remote care can ensure care continuity, prevent unwanted hospital visits or admissions, and reduce overall costs. Integrating technology for understanding consumer behaviour for customising products, detecting frauds, and reducing turnaround times for claims can be a win-win for the payor, provider, and patient.

For patients, cost, access, quality, and experience, are deciding factors when it comes to healthcare. A VBC model incorporates patient perspectives, clinical outcomes, and overall cost considerations to achieve the best possible care. VBC strives to measure well-being and quality of life as perceived by the patient, along with patient experience across the care cycle. However, balancing patient perception with actual clinical outcomes is essential to avoid adverse health consequences. Engaging the patient, family, and community is another important aspect of value-based care, as it allows care continuity outside of a hospital setting. When patients, family members, and other caregivers in the community are provided with basic caregiving training and health management skills, it helps improve patient outcomes. This model seems to be gaining ground in low- and middle-income countries where access to health services and resources can be constrained. In addition to health improvement, such models address patient needs and experiences while reducing associated costs.

Value-based care focuses on patient centricity by emphasising physical and mental well-being, preventive and integrated care, care continuum outside hospital settings, and evidence-based practices. These components of healthcare delivery are widely discussed but not fully implemented. VBC assimilates them into a framework with the patient at the centre and costs as the yardstick. It also brings all the stakeholders back to the table with a single focus—value to the patient, while delivering benefits for the broader health system.

The move to a value-based system is a gradual process. Healthcare providers have experimented with different components of value-based care, but implementation at a health system level (national level) is another task. Also, the successful implementation of a VBC model in any type of healthcare setting will require participation from all stakeholders. Patient, provider, and payor alignment is just the starting point. Implementation of VBC at a system level would be highly contextual, and some key strategies to get started would include identifying population segments and disease areas that would benefit most from a VBC approach; identifying and agreeing to care goals; standardising care protocols; measuring outcomes and costs; integrating care and using ICT; identifying payment models (capitation/bundled); data for benchmarking and improvement. As the transition progresses, a culture of continuous learning and improvisation, along with support from the highest levels of governance, will be necessary to establish fully value-based care. It is a long journey, but a well-developed VBC system can benefit all stakeholders by keeping the population healthy at lower costs.

Ashish Sachdeva, Research Director & Adjunct Assistant Professor, Max Institute of Healthcare Management, Indian School of Business

Shivani Tyagi, Research Analyst, Max Institute of Healthcare Management, Indian School of Business

[This article has been reproduced with permission from the Indian School of Business, India]