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A Value-Based Health Care System?

by Scott MacStravic

One of the major themes at the World Healthcare Congress in April was the movement toward “value-based health care”.  Most discussions referred to “value-based” purchasing, benefit design, payment, or some other specific element of the big picture, but the big picture is clearly the combination of all the pieces, working systematically and in an aligned fashion toward the same goals.  And the ultimate goal is to achieve a value-based, sustainable health care system that delivers adequate and acceptable value to all its stakeholders.

For this to happen, all the parts of the system must be value-based, value-focused, and value-producing.  They must support and reinforce each other, in contrast to the current non-system that everyone realizes is failing.  But perhaps most important, all the stakeholders in the system must have the same or at least compatible definitions and measures of “value”.  And that may prove the toughest nut to crack, given the historical diversity of opinions on the subject.

Since all parts of the current non-system must change in order to achieve a value-based alternative, there is no single beginning – all parts must begin to move toward value-based behaviors, and as soon as each one can.  This means, for example, that:

  •     Providers must move to value-based operation
  •     Payers must move to value-based payment
  •     Employers, insurers and governments must move to value based purchasing
  •     Consumers must move to value based health services purchasing and value-based health behavior
  •     All the disease or other cause-specific associations must move to value-based cooperation

Whether movement in such directions will be brought about via free market forces, by payers, governments, consumers, or providers, is yet to be determined, but it is unlikely that there is one best way to do it, particularly in the US, with its history of arriving at the right solution only after all else has failed.  Movements in the right direction are unlikely to be synchronized, and consumers are likely to be the biggest part of the problem, if only because they are so many and diverse.
There are clear signs that employers are already moving toward value-based benefit design and purchasing, though by no means all.  A large and boisterous number are dropping out of health care entirely, leaving other stakeholders to solve the problem, while they simply stop paying for it.  But most large employers, particularly if they rely on workforce talent rather than simply warm bodies, have realized they have the most to gain in a value-based system, as long as their definition and measures of value are included.

The federal government, primarily Medicare, along with states in their Medicaid partnerships, is moving toward value-based purchasing, though its notion of value is mostly focused on reducing sickness care expenditures.  To collaborate well with employers, it should recognize the importance of supporting the overall economy by including workforce productivity, performance, and cost in its definition, as well.

Providers have already made some significant, and in many ways surprising moves toward a value-based system.  Some, at least, have realized that this system cannot be merely a sickness care system – indeed no such system can survive for long.  Only if it truly becomes a “health” rather than just sickness system, only if it can reduce the incidence and prevalence of disease and injury to a significant degree, will the sickness part of the system be sustainable.

Consumers will surely be the last to adopt the value-based approach in total.  Many are already being pushed toward value-based purchasing through a combination of increased responsibility to pay the costs of any care they consume, and increased information whereby they can judge the relative value of alternative treatments, providers, and behaviors.  And they are being aided in this by employers and retail entrepreneurs who are offering a new value-based array of providers to serve them.

It would be nice if all stakeholders could agree on a template that at least outlines what the entire system should look like, but it may be inevitable that various parts of the system will work independently, guided perhaps by a vague notion of what it should look like, and counting on their ability to adapt to whatever other parts of the system come up with.  And as the British with their NHS have demonstrated, even the ultimate system will always be in a process of development, as stakeholders and circumstances, demand change.

In any case, there are healthy signs that the movement has already started, and that though there will be seemingly insurmountable obstacles in the way, there is a good chance we may pull it off.  Of course, we are likely to do so kicking and screaming all the way, in more conflict than cooperation, though it should be fun to watch.