Value-Based Healthcare Put Into Practice

9 April 2018

It isn’t a huge surprise that the concept of Value-Based Healthcare (VBHC), introduced in 2006 by Professor Michael Porter, originated in the USA. With the highest healthcare costs per capita, the USA can surely be considered an extreme example of complex, fragmented, nebulous and inefficient healthcare.

A recent study shows that healthcare in the USA currently wastes between $476 billion and $992 billion per year on:

• unnecessary services that do not contribute to better health;
• inefficiency due to systematic errors and inadequate coordination;
• excessive prices and administration costs;
• fraud;
• missed prevention opportunities.

But it’s not only in the USA – the principles of VBHC are being embraced in many other countries too. This is because there are strong calls from all sides to make healthcare more affordable, less wasteful, safer and to make it better aligned with the needs of the patient or an improved patient experience.

The VBHC model is reminiscent of the Customer Value model, which came into vogue at commercial organisations a few decades back. The basis of this is to achieve an optimisation of the customer’s value compared to the value delivered to the customer, not only in terms of concrete product or service but also in terms of customer experience. The difference is that when you are looking at the value of the patient in VBHC, the aim is not to maximise that but actually to minimise the costs for delivering the desired outcomes. When you are looking at the value for the patient, it is very difficult for healthcare providers to properly define it and make it measurable in terms of PROMS (Patient Related Outcome Measures) and PREMS (Patient Reported Experience Measures). Therefore in practice VBHC is a difficult balancing act, and that’s before you consider the other complicating factors such as:

• the difference in application between cure and care;
• fear of achieving complete transparency in healthcare;
• the current way healthcare is financed based on quantity rather than quality;
• individual patients’ ability to be involved in the decision-making on the healthcare offered;
• having and capturing up-to-date data on the patient level, about both healthcare outcomes and patient experience;
• organising healthcare from the patient perspective and not from the perspective of the specialisms.

At present, the practical use of VBHC in the Netherlands is mixed and the burden of proof is limited. As we see it, healthcare providers that want to apply VBHC can learn a great deal from the implementation of customer value management in the business sector. Organisations that apply this successfully have not only adapted their measurement and control systems, they have also adapted their organisation, processes and systems and have the right people with the right skills.

How do you get this started?

It is important to adopt a step-by-step approach: start small, show success and then gradually expand. We have applied this working method many times when introducing customer value management with great success. The steps you can follow are:

1. Formation of a dedicated VBHC team

You start by putting together a multidisciplinary team around the patient (or their disease). This team must be enthusiastic about the principles of VBHC and willing to work together to determine and achieve VBHC goals. For the way this team will work together, it’s a good idea to instil and follow the principles of Scrum or Agile Working. Agile and Scrum are phrases that are often used synonymously. The Scrum method is highly suitable for guiding complex changes and/or activities, including those beyond IT.

2. Identify VBHC goals and metrics

An important first step for the team is to identify the goals and the derived metrics that you want to achieve with the VBHC strategy:

• Goals: the ultimate objectives you want to achieve with VBHC, such as better health, better experience of healthcare quality and lower costs per patient. The idea is to thereby reach a proper definition of patient value.
• Determine metrics that correspond to the overall goals such as PROMS, PREMS, efficiency, costs, healthcare quality measurements, process variables, etc.

Both for the overall goals and the metrics it is important that there is agreement within the team about how these are defined and how they are measured. This can be done with reference to academic literature, VBHC practical experience and more. It is also important to make the goals and metrics SMART (specific, measurable, attainable, relevant and time-bound).

3. Set up a VBHC measurement system

In order to follow the achievement of the goals and identify correlations between the metrics and the goals, you need to set up a measurement system: what are we going to measure, when, on whom and how? You may need to keep a baseline measurement to ascertain the starting point. That is certainly the case for goals and metrics that have not been used before in the past. When setting up the measurement system it is vital to consider a number of prerequisites, such as:

• the validity and reliability of the measurements;
• the level at which the measurements are made: ultimately this must be traceable back to an individual patient;
• the times at which the measurements are made, including the time lapse following a given patient interaction (e.g. how soon after a visit to a specialist do you want to know what the patient thinks);
• how the data is recorded;
• how to approach patient privacy or GDPR;
• the kind of reports and analyses you want to run on the data.

4. Redesigning processes

The next step is to work with the team to set out the processes, or rather the patient journeys, that will be involved in the diagnosis, treatment and after-effects of the disease. This must be done with reference to the goals and metrics and the related measurement system. Experiences from the past can play a major part when redesigning processes: what went well which we want to keep and what went less well and so could be improved? When redesigning the processes it is also essential to thoroughly look at the current communications landscape, with the principle being: online first. The starting point in redesigning processes is to think from the perspective of the patient. Therefore it is also a good idea to involve the patient actively in this step.

5. Implement and celebrate success

In customer value management, we often entitle this step: earning while learning. When you are implementing the new working method within VBHC, however, it’s not literally about making money but about achieving the goals that have been set. So it is necessary to work in short cycles. It is crucial to systematically measure and monitor the goals and metrics and evaluate how the new working method is going. Anything that could be better needs to be adjusted. It is wise to log these adjustments accurately so that the effect on the results is measurable. Measuring the metrics and the achieved goals and the correlations between the two is important. But certainly, so is celebrating successfully whenever the team is proven to be on the right tracks. This will cause the surrounding departments to also be inspired to want in on this new way of working. In our experience, it often snowballs and acts as a catalyst for the organisation as a whole to adopt the new working method.

When embarking upon a VHBC process at a healthcare provider, it is a good idea for the senior management to be fully aware that its implementation will have a major impact on the entire organisation. It is also sensible to rope in support from people who have ample experience in designing and implementing such processes and have them by your side during the implementation. Change management plays a major role, but so does commitment from senior management and multidisciplinary collaboration, the right approach, internal and external communications and project management.