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What is "Value Based Health Care"?

Value Based Health Care VBHC finds the optimal compromise between objective and subjective benefits for the individual patient to ensure sustainable, superior and cost-effective medical care for all patients. Johnson & Johnson Medical sees this as the expedient track for the Swiss health care system.

A dilemma is a continuous challenge for the health care system: The fixed entitlement for best-possible health care for everyone leads to a continuously increasing demand for medical services in combination with limited financial and personal resources. A disproportionately high number of elderly people with chronic conditions burden the resources of the stagnating or declining young working population. This in turn constantly increases costs and staff shortages in the health care system.

Despite challenging circumstances, benefits for the patient should always be the focus. Innovative healthcare continues to evolve through new solutions and technologies from science and research, along with experience-based optimization of applied techniques for prevention and early interventions. This proven cooperation between the care providers improves patients’ quality of life and reduces morbidity and mortality rates continuously. Similarly, pressure is increasing on profitability for care providers and insurance companies. This pushes them to prefer the financeable to the doable, and constantly demand better cost-effectiveness. This requires criteria that compare the price of a service in relation to its benefit. As providers of medical products and services we must demonstrate that the prices demanded for our solutions and products are justified by the benefits to the patient, the care providers, the insurance companies, and society.

The Concept of Value
Warren Buffet says, “Price is what you pay for. Value is what you get"

In the free market economy, supply and demand determine the price or the market value of a thing or a service. Defining or de-emotionalizing the value of human health, lifespan, or mental well-being is less easy and requires, at the least, a consensus from all relevant stakeholders, and, in the free world, a social consensus. The implication here for value-based health care is that the consensus for total value of a treatment pathway must be found with all the relevant stakeholders. Solution leaders provide direction:

Porter, Triple / Quadruple Aim
Michael Porter published his book “Redefining Health Care” in 2006 and this started the transition to Value Based Health Care. Porter defined the value of health care as the health outcome that was achieved per dollar spent:

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Figure 1: Porter's definition of value in healthcare

According to Porter the primary goal of health care is a higher patient value. If this increases, all parties involved benefit (patients, insurers, care providers, and suppliers) as does the economic sustainability of the health care system.1

The health outcome is the condition of the patient at the conclusion of the treatment cycle that was achieved through the provision of all treatment steps.

The costs encompass all monetary amounts across the entire treatment cycle that were vital to achieving the patient’s health outcome. An isolated reduction in costs could thus have a negative effect on the patient value and lead to false savings.

The patient value is defined by the outcomes obtained and not by the type or quantity of treatment steps. Porter measures care deployment based on the patient outcomes and the costs of the resources used (e.g. time per nurse, number of procedures, type of meds, quality of the implants etc.). However, inputs such as process improvements can also be important factors to include both health outcomes as well as costs in the equation. Value based health care promotes improvement of patient values from the health care system. Future decisions should be based on this and not on price.

According to Porter, to achieve improved results quickly, a good basis for decision-making and action steps to reduce costs, it is vital to start appropriate data collection to communicate the patient value transparently, to compile patient outcomes, and to compare and evaluate them accordingly. 1, 2

In 2007 the Institute for Healthcare Improvement (IHI) first developed the framework for the “Triple Aim for health care”. It is an approach to optimize the performance of the health care system by simultaneously focusing on three dimensions (Figure 1):

  • Improving the treatment experience of the patients (including quality and satisfaction)
  • Improving the population’s health
  • Reducing the per-capita costs for treatment

The revolutionary aspect to this approach was that it expanded health care goals. Until this point, improvement of the treatment experience was primarily focused on the subjective experiences of the patient who received the treatment. In addition, the health of the general population was also taken into consideration as the causes for illnesses can frequently be found in a social context. The third goal was defined as the minimizing of the per-capita costs for care. In summary, the three-fold goal (Triple-Aim Concept) results in: better patient experiences, better general population health, and lower per-capita costs.3

After the general acceptance of the Triple-Aim Concept, more attention and importance were paid to a healthy and happy workforce to further improve performance of the health care system. Bondenheimer and Sinsky augmented Triple Aim in 2014 with a fourth aim, staff satisfaction. Triple Aim became Quadruple Aim (Figure 2).4

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Figure 2: The Triple / Quadruple Aim Framework

Quadruple Aim recognized the great importance of an engaged and productive workforce to strengthen Triple Aim.

Measuring results, satisfaction and costs
Value based health care clearly answers the questions “Value for whom?”: The patient is one of the key stakeholders. To measure the outcomes reported by the patients themselves (PROMS), instruments are increasingly being developed and used to complement those outcomes that were mostly reported as “classic” in the health care system. With PREM tools, satisfaction throughout the overall patient pathway and communication can also be measured. Both these methods are based on the value definitions in Triple- and Quadruple-Aim. It should be noted that these measurement methods are undertaken with specific scientific instruments that were developed to ensure objective and robust evaluations.

PROMs (Patient Reported Outcomes Measures) are a range of standard tools for general or specialized/status-related outcomes. These tools measure the health condition status declared by the patient themselves before and after a procedure, without the patient’s answers being influenced or interpreted by a clinician or other person. Examples for measurements of patient outcomes are: functional status, well-being, (health-related) quality of life, symptoms (e.g. aching), adhering to the treatment program, social functioning level etc.

PREMs (Patient Reported Experience Measures) are a range of standard tools for general or specialized/status-related experiences. They measure the awareness and the opinions of the patients concerning their treatment experiences and focus on the provision of medical care. They cover a number of interactions of the patient with the health care system - before, during and after a procedure. Examples of such measurements are satisfaction, the treatment experience as well as observations of behavior by health care providers.

In light of the increasing importance of these instruments it must be noted that data which are directly captured through the health care system (e.g. in hospitals and patient files) continue to be an important resource for the measurement of patient outcomes. In this category we find information concerning action steps such as the duration of the patient’s hospital stay, complications, re-admittance rates etc.

In value-based health care, costs are a key component in valuation and the original purchase price must be divided across the entire patient path. Costs include all direct costs in relation to the patient’s treatment program as well as the use of resources before and after the first procedure. The overall costs also valuate social aspects (e.g. effects on family members, loss of productivity, welfare etc.).
Our partnerships work symbiotically with the needs of the institutions to sustainably achieve more for their patients.

Porter, ME (2010). What is value in health care? New England Journal of Medicine, 363 (26), 2477-2481.
Porter, ME (2008, August). Defining and introducing value in health care. In Evidence-based medicine and the changing nature of health care: 2007 IOM annual meeting summary (pp. 161-172). Institute of Medicine Washington, DC.
Institute for Healthcare improvements,
Bodenheimer, T., & Sinsky, C. (2014). From triple to quadruple aim: care of the patient requires care of the provider. Annals of family med-icine, 12 (6), 573-576. doi: 10.1370 / afm.1713

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