What is the future for value-based healthcare?


What is the future for value-based healthcare?

When talking about healthcare, the focus is often on the cost of providing treatment. Over time this has been changing: most countries with developed economies are nearing the limit of what they can afford to spend on healthcare, but demand is increasing as new treatments come on to the market and the burden of ageing populations continues to rise.

Consequently the focus of providers and payers is shifting to enable them to obtain  better value for the money spent, and the concept of value-based healthcare (VBHC), put forward by Harvard’s Michael E Porter more than a decade ago, is attracting growing attention. Porter defined value in healthcare from a patient perspective, as follows:

Patient value can be increased either by improving patient-relevant outcomes or getting the same outcomes but reducing the cost of patient care, through better use of resources.

Porter argued that there was a need to change the focus of healthcare output from treatment volume to health measured in terms of patient value. Health and not treatment is the essential outcome from medicine. In the VBHC model, product and service providers should be paid on the basis of the patient and health system outcomes they achieve, rather than for the amount of treatments they provide.

The value of health can be measured in terms of survival (years gained) or the degree of recovery and improvement in the quality of life; but this then be given a monetary value. For many decades there has been intense debate on “what is the value of a human life, or the quality of life?” and in the current environment this is only likely to intensify.

Trends in the adoption of VBHC across Europe

Across Europe there have there are distinct patterns of VBHC adoption with key therapy areas like oncology and rare diseases leading the way. In early adopter countries. VBHC is underpinned by system and policy leadership, supported by access to relevant datasets. However, there are a number of common reasons why VBHC has not yet been adopted at scale. We consider each of these reasons and identify potential catalysts to help organisations realise the true potential of VBHC.

The need to derive insights from data

To allow value to be measured and therefore to be paid for, real or proxy measurements of patient and health outcomes are required.  A significant catalyst driving the trend towards VBHC is the increasing volume of available health data, both structured and unstructured, and the ability to extract meaningful information from it. There remains, however, a continuing need to improve the quality of the data and the ways in which it is analysed. Moreover, there is a need for alignment on outcomes across the different perspectives (patient, system, industry and payer) which outcomes to measure and how to measure them.

One development that could enhance the use of data is Artificial intelligence (AI), specifically  machine learning tools to increase our ability to extract meaningful information from a growing pool of data. Machine learning algorithms (AI) are already being used to enhance radiology images to predict and detect the fast progression of disease at an early stage, before costly interventions are needed. However, much more work needs to be carried out to make full use of this knowledge to build earlier interventions or even prevention. Fully capturing and leveraging these insights would enhance patient-relevant outcomes and simultaneously reduce the costs of achieving them.

A change of mind-set and a patient-centric approach are needed

Currently, however, the healthcare system is not designed to adopt a value-based approach. If health rather than the volume of treatments is to be seen as the outcome of any healthcare intervention, there needs to be a social consensus about value and what it means. The views from one scientific community about health outcomes will be insufficient on its own to achieve acceptance of VBHC as a way forward.

A patient-centric approach will be key to understanding value. A patient perspective should be the starting point for measurements of value, and a greater dialogue between patients and clinicians to understand patient needs and mitigate discrepancies between clinical and patient-reported outcomes. This means defining and using more patient-reported outcome measures (PROMs or ePROs) to capture relevant data and quantify outcomes.

There is a long way to go. For example, for patients who have undergone prostate cancer treatment, their quality of life is affected by the extent to which they suffer from urinary incontinence or sexual dysfunction, but currently these are not common measures of output from treatments and there is no common basis for measuring such outcomes among clinics.

Another challenge is to determine how much personalisation will be possible, to allow for different definitions of value by individual patients. VBHC will only succeed if it does not add more complexity to the healthcare system, so as personalisation and precision in treatments develop, it will still be necessary to simplify measurements by focusing on common (unifying) outcomes and values.

The market for VBHC

The accelerated rate of innovation in healthcare in new modalities like digital therapeutics and gene therapy and the high cost of many health innovations are likely to result in a change in attitude to VBHC. In fact, we have already seen this with a greater acceptance of outcome based payment models for curative therapies, with manufacturers and payers becoming more willing to agree to value-based models rather than volume based payment for treatment. This calls for an alignment in views about value and price between manufacturers, patients and the payers for treatments. It will affect the way that manufacturers look at research into developing new treatments and the willingness of customers to pay for them. However, value-based contracts between manufacturers and customers (payers), where payments are linked to patient or health system outcomes, is still a new business model. The potential benefit is that if manufacturers are paid for health outcomes rather than treatment volumes, they will have a clear incentive to improve patient or health system outcomes with the treatments they develop and will also engage more often in supporting patients and health systems to overcoming the barriers to better outcomes.

Leadership is needed

In addition, there are significant infrastructure and leadership barriers for successfully operating a VBHC system, for example there is a need for greater trust between system stakeholders and for industry-wide standards or alignment on data quality, reporting and audit. There are also issues relating to access to personal data and data security, and the challenge of achieving scalability (moving from small successful pilots to large-scale implementation). Much greater progress needs to be made on these topics.

System wide incentives and impetus are needed to drive change. Without the top-down commitment from policy makers, supported by acceptance and momentum from providers and health care professionals, it will be difficult to establish VBHC. And we need to invite patients, their caregivers and patient advocacy organizations to humanize the patient experience and to bring a voice to the strategic narrative that needs to be championed at leadership levels across policy makers, payers and healthcare providers and institutions.  Without leadership at all levels, establishing a significant change in momentum will fail.


However, COVID-19 is having an enormous impact on healthcare. It has created a growing backlog of patients waiting for elective care and has amplified many of long-term conditions of patients awaiting treatment. The crisis has prompted more extensive use of technology in patient interactions and for monitoring the health of the population, and a greater appreciation of the value of prevention in health is building. Pressures on funding are leading to greater scrutiny of spending and its impact, and difficult decisions about allocation of scarce financial resources will need to be made.

It is likely that the issues and developments arising from responses to COVID-19 could act as a catalyst for wider adoption of VBHC.  It is time to seize the opportunity, now.


This article has been written together with DayOne and is the outcome of a discussion on value-based healthcare (VBHC) during the DayOne Experts Event hosted by DayOne and Deloitte Switzerland in July 2020. DayOne is the Healthcare Innovation Initiative of Basel Area Business & Innovation, the economic promotion agency of the cantons of Basel-City, Basel-Country and Jura.

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