Is the rapidly changing world a challenge or an opportunity for building more resilient health systems that can cope with new realities? Despite obvious complications, the outlook is positive.
To achieve a sustainable future for healthcare, a change in mindset is needed. Value-based healthcare offers a promising path forward – but being able to achieve the goals of value-based healthcare is most importantly a leadership question. Instead of focusing on just reactively diagnosing illnesses, health systems need to start preventing them. This refocus requires a systemic perspective and a holistic approach, with more emphasis placed on lifestyle and the social determinants of health. In practice, this means a population-health approach that utilizes data-driven segmentation. Healthcare must also respond to the growing climate emergency not only by treating those affected by the climate crisis and its causes, but also by reducing its own emissions – and delivering the message about the risks climate change poses to health.
Value-based healthcare promotes a holistic approach to measuring value. Outcomes are tracked across the continuum of care and take into account the complete patient journey in terms of patient experience and population health. Outcomes are achieved through collaboration in the expanded healthcare system.
Value-based healthcare has spurred many payers and providers to realize that food insecurity, isolation, lack of housing, and other factors must be addressed first in their populations to achieve continuity of care and good health outcomes. Buying food and investing in housing is less expensive than having a patient return to the emergency room numerous times a year. This obviously highlights the need for new cross-sectoral partnerships.
Kaiser Permanente, Montefiore, and affordable housing
Finland has been effective in eradicating homelesness, with an estimated 4,600 homeless people in Finland according to The Housing Finance and Development Centre of Finland (ARA). In many other countries homelesness is a major-and even growing-problem.
In the US, homelessness affects over half a million people; housing instability causes mental and physical stress for individuals and families, often forcing them to choose between basic necessities and paying for healthcare. Kaiser Permanente uses impact investments to create more affordable housing and reduce the rate of homelessness, which in turn reduces overall healthcare spending.
Montefiore Health System also invests in housing in the Bronx, New York and has seen a decline in emergency room visits and unnecessary hospitalizations, resulting in a 300 percent return on investment.
If money and spending are reallocated towards prevention and more personalized, holistic care, this will dramatically change dynamics between organizations. It will challenge both the current roles of professionals and the business and service models of current healthcare players, moving the service risk from payers to providers. From a provider and solution ecosystem perspective, for example in medtech and pharma, this will require continuous innovation, platform thinking, and a willingness to collaborate with payers to build outcome-based partnerships.
Ideally, the power shift leads to a situation where patients will have more power than today. In the spirit of the Quadruple Aim’s fourth pillar, healthcare professionals are important and active players in the innovation ecosystem. The end result should be an improved patient and employee experience and better quality of care. These and a strong level of trust between all stakeholders are fundamental elements in a sustainable health system.
A multistep strategy: Think big, start small, learn fast
Transformation from volume-based to value-based healthcare is a complex journey. The transformation requires strong system-level leadership to advance system-wide restructuring of the processes that govern how healthcare delivery is organized, measured, and reimbursed. This will require coordination, collaboration, and open dialogue. Building trust between stakeholders and different levels of the health system is vital. This means not only new partnerships between organizations, but also that more and more ideas and solutions will emerge “bottom-up”.
A rapidly changing environment requires continuous learning in a decentralized way. This calls for an “ambidextrous approach” to system development that combines execution with explorative learning and knowledge creation. In practice, healthcare needs to utilize more agile development methods, meaning the use of a “test, learn, adapt” type of process which is open and collaborative. As learning speeds up, a key issue is building system-wide capacity and capability to implement the best available research evidence into effective, value-increasing action. To maximize the impact and scale of change, it is important to share best practices across health systems. Optimizing collaboration or development models for a specific context and goal is also needed.
Instead of just using best practices, a significant amount of experimentation with different incentive and collaboration models is needed to find optimal approaches to value-based healthcare for different contexts of care. This is something payers and providers will have to invest in to build the mutual trust required for a successful transformation.
The first step in transformation is a clearly defined and appealing vision – a goal that is commonly shared with a strong group of players behind it. From the perspective of leadership, a typical challenge is to avoid concentrating on narrow goals such as better access to care or more efficient processes. Without underestimating the importance of incremental change, value-based transformation requires a more strategic perspective and systemic approach.
Establishing a clear goal is key. The goal should be broad enough to cover all necessary aspects and it should not just focus on one area such as improving access, containing costs, or increasing profit, as this can lead to trade-offs that worsen the patient experience and the overall level of care.
Noble mission statements and experimental pilot projects are not enough to impact a healthcare organization’s culture or change volume-based delivery approaches and payment structures. Even though healthcare providers or solution ecosystems have never been against improving outcomes, the current incentives align their central focus on growing volumes and maintaining margins. Therefore a long-term strategy and a step-by step approach towards cultural change is needed.
Instead of a single process or a clearly defined project it needs to be an overarching strategy, or as Porter and Teisberg call it, a “value agenda.” The role of governmental agencies and other payer organizations is undoubtedly pivotal. Transformation will require a holistic approach with a new emphasis on population health, new alliances between healthcare organizations, and investments in the tools and services needed to support innovative models of care. In addition, professional engagement is a key issue – people engagement is the foremost action in the WHO's global strategy on people-centered integrated care.
Executing system-level change is a management challenge. In a rapidly changing environment, a change management approach needs to be agile, open, and invest considerably in continuous learning. This is especially true in a healthcare context where a wide variety of key stakeholders calls for a more collaborative approach.
When implementing value-based care, it’s important to remember that health systems are complex. In an approach set out in the journal The Lancet, three levels of strategies are defined: macro, meso, and micro-level. Macro-level strategies are needed to address the “high level social, political, economic and organizational structures that shape a health system.” Meso-level strategies “address quality of care through the coordination and management of a network of facilities and communities.” Micro-level strategies “aim to directly influence the performance of the staff or the operations of a facility”.
It is critically important to keep in mind that healthcare’s key mission is to increase the wellbeing of people. In other words, clinical and population health gains should be at the core of every strategy.
The following five key principles help in designing implementation processes:
Even though knowledge about best value-based healthcare practices is growing, we are still in the phase of learning and creating awareness and we will be for a while. To create awareness, health systems need to:
identify and communicate variations in healthcare to ensure transparency about why value-based healthcare is needed
ensure better communication and sharing of what works and what doesn’t at the local and national level
adopt common terminology so that everyone involved understands what value-based healthcare means
2) Research, development, and innovation
Payers, in this case governments or insurance companies, need to position themselves as leaders in a value-based transformation. They need to focus on creating new knowledge and enable continuous learning. The ability to gather real-world data on a population as well as on an individual level reveals opportunities for developing performance-linked information and incentive structures. Traditional quality improvement methods, such as understanding the problem, identifying possible changes, testing those changes to see whether the change is an improvement, and then incorporating that change and moving on to try another, are useful. Quality practitioners focus on data because it’s crucial to know whether a change has improved things, but the key is to be pragmatic – using “good enough” and easy-to-get data.
3) Learning communities
Community-led transformation requires co-creating with patients and professionals. Promoting opportunities to innovate and develop care processes or services bottom up makes the learning loop faster. Facilitating cross-sectoral knowledge exchange and open innovation among the community and ecosystem allows the latest innovations and ideas to be used. For example, virtual environments provide a cost-efficient way to share and co-develop ideas. Collaboration and networks require facilitation and organizations need to continuously build their networks. Most importantly, to have an open dialogue, trust is needed between stakeholders.
Accountability mechanisms should contribute to improvements in quality of care. This means, for example, the following steps:
Invest in awareness and education at all levels, including among policy makers, politicians, program managers, service providers, and the general public
Share information on health system performance with the public and promote transparency of quality measurements
Develop strategies for quality of care accountability that combine legal, performance, and social accountability tools
Develop the necessary skills in value-based healthcare by training staff in how to measure outcomes, patient experience, and resource use
Offer tools (such as population health management dashboards) for health professionals to manage their population
Monitoring and evaluating the impact of all improvement efforts at a national and subnational level is needed to drive learning and improvement.
5) Patient engagement
By applying shared decision-making (SDM) we can recognise the importance of patients’ individual goals, values, and preferences.
The way forward – from incremental improvement to paradigm change
High-quality health systems are defined by the following four main pillars: they are made for people, equitable, resilient, and efficient. In order to achieve this standard, health systems need to take into account a given population’s health needs and expectations, and care must be paid to governance, partnerships, platforms, and the skills of the workforce. Ideally, health systems should be able to measure and learn from data.
There are many challenges ahead. Healthcare systems continue to face escalating costs, lack of critical resources and human capital, low-value and disjointed care, and huge disparities in care outcomes. In addition, healthcare continues to lag behind most other industries in its ability to engage citizens, which puts other industries at the forefront of innovation. In the current fee-for-service model, the focus is on incremental units of care. The dysfunction of our modern healthcare system most certainly isn’t about failure of intention, rather it is about the pursuit of siloed and sometimes even conflicting priorities.
Suboptimization leads to care failures and patient harm
Efficiency-led operating models as well as volume-based and sub-optimized incentives might lead to increasing diagnostic errors and failures in care. The evidence suggests that 10% of patients are unnecessarily harmed during care and 15% of hospital expenditure in OECD countries can be attributed to treating safety failures. Most importantly this is an individual tragedy for the patients, but it is also a significant cost factor: patient harm is the 14th leading cause of the global disease burden, putting it in the same league as tuberculosis and malaria.
The European Commission’s expert panel defines value-based healthcare as “a more comprehensive concept built on four value-pillars: appropriate care to achieve patients’ personal goals (personal value), achievement of best possible outcomes with available resources (technical value), equitable resource distribution across all patient groups (allocative value) and contribution of healthcare to social participation and connectedness (societal value)”.
In addition, healthcare systems need a shared long-term strategy towards reallocating resources from low to high-value care. This will mean investing in predictive care models and innovative therapies that will lead to disease prevention, better care outcomes, and higher societal value.
To realize the opportunities value-based healthcare has to offer, we need to change the underlying information and incentive structure. These changes include the following:
1) Access to data is a critical enabler that is required for aligning incentives towards outcome. Data is important to not only improve quality of care, but also to improve public health practices that lead to better population health and more equal outcomes. Data is also important in managing increasingly hard-to-grasp health systems with complex and liquid organizational structures.
2) With the help of modern technology and data, health systems will have a much better understanding of the health risks and needs of individuals and populations. The same applies to understanding the effectiveness of various therapies, paving the way to adopting outcomes-based models. For example, availability of data increases our understanding of lifestyle-related health risks and effective ways to mitigate those risks. Data provides a way to align incentives and move the focus of the system more upstream, meaning the promotion of healthy living instead of just delivering reactive healthcare services.
3) A holistic approach to health and supporting people to adopt healthier lifestyles, with increased physical activity, smoking cessation, and avoidance of excessive alcohol consumption. This means coupling incentives and reimbursement.