Health and Healthcare Systems

What is value-based care, and why is it so important? 

Nurse Health Practitioner Rachelle Quimpo (C) introduces patient Shreya Sasaki to Dr. Heidi Meyer, MD Family Medicine, who appears on a video screen remotely at a newly opened Kaiser Permanente health clinic inside a Target retail department store in San Diego, California November 17, 2014. Four clinics are scheduled to open in Southern California to provide pediatric and adolescent care, well-woman care, family planning, and management of chronic conditions like diabetes and high blood pressure for Kaiser members and non-members.     REUTERS/Mike Blake (UNITED STATES - Tags: HEALTH BUSINESS SOCIETY) - GM1EABI0E8L01

Telehealth can help reduce long hospital stays. Image: REUTERS/Mike Blake

Frans van Houten
Chief Executive Officer, Co-Chair PACE, Royal Philips
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Healthcare Delivery

This article is part of: World Economic Forum Annual Meeting

Our health underpins our happiness and is a foundation of economic advancement. But the challenges of promoting healthier lifestyles and providing access to adequate healthcare is enormous, especially with a globally growing and ageing population and the rise of chronic diseases. Governments and healthcare providers alike face the daunting prospect of containing costs while improving patient outcomes.

Value-based care represents a drive for improved patient outcomes at lower cost. The industry’s ‘Quadruple Aim’ adds the vital importance of the patient and practitioner experience to these compelling goals. With a continuous focus on this aim, value-based care should be translated into daily practice.

Thus, the question is not if we should embrace this idealistic and attractive new healthcare paradigm, but how. To achieve the Quadruple Aim requires a huge transformation across the entire end-to-end value chain. Risks and pitfalls are plentiful.

Inspirational successes

Sure enough, there are many pockets of pioneering excellence where this vision is already being realised. For example, Karolinska University hospital in Stockholm, Sweden, is redesigning the entire stroke care pathway, leading to a significant reduction in the ‘call to needle’ time to improve patient outcomes.

Yet orchestrating seamless care pathways across traditional departmental silos has proved, initially, to be a big challenge. Through strong change management Karolinska succeeded, delivering immediate and long term benefits to both stroke patients and society as a whole.

Elsewhere, Emory Healthcare in Georgia, US, is expanding access and optimizing critical care services through a remote patient monitoring eICU solution which enables patients to be taken care of in “lower cost” beds in their communities.

By integrating round-the-clock monitoring and real-time clinical decision system support to optimise resources, all while patient rehabilitation is enhanced, long-term health outcomes are again improved – even as cost savings are made.

Utah-based Intermountain Healthcare is another source of inspiration. As an integrated health system, it redesigns care delivery to ensure effectiveness and efficiency, from community to tertiary care.

In a recently published example, Intermountain developed an end-to-end pain management strategy to tackle opioid abuse, while maintaining high-quality pain management for patients. Intermountain’s innovative approach includes the Opioid Community Collaborative, essential partnering between public health organisations, behavioural health providers and even law enforcement agencies.

Obstacles abound

Despite these successes, we face some challenges, especially in scaling up pilot projects that involve new care models. For example, one well-known and hugely respected hospital system recently pioneered a breakthrough telehealth model providing remote oversight of elderly patients with multiple health problems at home.

This preventative telehealth solution helped reduce hospitalisation rates by nearly a half and death rates by more than a quarter – all while lowering cost by more than a third and allowing patients to recover in the comfort of their own homes.

Patients were happier and, for the payer, there was a significant benefit through cost avoidance. Hospital staff felt proud of the results. Yet this hospital system could not find a sustainable business model for the service it offered, as it did not qualify for reimbursement. For the hospital system’s financials, this solution was a net ‘cost’: in the existing reimbursement system, the hospital actually missed revenues when patients did not attend the hospital. So the pilot service that benefited patients and provider will not be continued in 2018.

We therefore face a number of structural issues before we can truly say we offer value-based care. One clinician said to me recently: “Our health ecosystem is perfectly geared up to maintain the status quo”.

Rich Guarino of the Lahey Clinic, Massachusetts, described industry complexity well when he observed that healthcare is the only industry where:

⦁ the person ordering the service does not get the service

⦁ the person receiving the service does not pay for the service

⦁ the provider of the service does not determine what they get paid for the service

⦁ the payer for the service determines the price but does not receive the service

This description has echoes in many countries. One insurer in the Netherlands told me recently that there was little point in working with hospitals to make productivity savings as those gains would either be backfilled with more ‘volume’ or other insurers would reap the rewards.

Changing the status quo

Despite the challenges, I do see a North Star where value-based care and the quadruple aim is within reach. But change is required.

First and foremost, we must take a more holistic view of patient care journeys and then better integrate workflows and technology so that the care experience is seamless and provided at the location where it makes most sense.

The examples of telehealth and stroke pathways exemplify the way to go, with seamless and waste-less integration being the mantra through every stage of the patient journey. We can take ‘waste’ out by routinely adopting modern management techniques like Change Management, LEAN and Six Sigma or by designing in efficiency across health systems, not just within a single department.

Second, innovation does and will increasingly make a difference. Genomics, Artificial Intelligence and Deep Machine learning technologies are helping practitioners deliver better diagnosis and actually freeing up time for patient interaction.

In the short term, this involves deeper investment in diagnostic and clinical decision support systems. As more appropriate treatments are delivered in a timely manner, tailored to the individual patient, long-term costs will be reduced as patient outcomes improve.

In this equation, technology providers need to be held accountable to deliver their part of the service. To be proactive about this, we at Philips have introduced technology-as-a-service contracts that link their use and payment to achieving the value-based care objectives of the health system.

Third, we must become better at gathering, handling and making sense of huge quantities of data currently dispersed across multitudes of caregivers. We can unlock insights from rich data sets in order to get to personalised care for individual patients, thus improving how medicine is practiced, for example by reducing ‘variance’ between caregivers. This even allows us to improve the health of entire populations.

But we must unlock access to all health data sources and turn these data into actionable insights – all while retaining data privacy and being fully secure. Many of us trust our financial health to digital systems; now it’s time to create secure national health data networks that link caregivers, primary care, pharmacies and hospitals. With good governance, all stakeholders – industry, academia and government among them – can unlock new life-changing insights from these data.

As we’ve discussed, we must also change reimbursement systems to better reward outcomes and productivity. Value-based care involves more than new payment models or cost containment.

As Don Berwick MD, president emeritus and senior fellow at the Institute for Healthcare Improvement (IHI) writes, complex incentive payment models used to reimburse care can produce incentives to do more and, in some cases, too much, such as ordering more tests and procedures. In addition, he says current systems can be prone to discouraging providers from participating in activities that encourage care co-ordination, investments in telemedicine and holistic approaches to care.

My final suggestion is therefore to better understand the behavioural aspects in relation to change. For example, we must motivate consumers to change lifestyles. We’ll also have to change the very roles of healthcare staff and how they work.

How does the patient-caregiver relationship change when patients (need to) take more accountability for their own health? How does the caregiver follow a patient, end-to-end, through the care journey, offering proactive coaching alongside curative treatment? And how do we accomplish this across hospitals and primary care?

Financial oversight should be optimised across the end-to-end care chain. Incentives will have to be redefined. Insurers/payers need to play their role.

Let’s get it right for future generations

Despite these challenges, I remain hugely optimistic and encouraged by how change is being embraced globally. The key is to find more agents for change.

This year, Philips is again participating in the #YoungWEF initiative and we’re inviting children to explore what they would do to change their health and healthcare.

Engagement with young people is always a refreshing break with routine. It’s also a reminder of how we need to constantly keep our thinking agile and unencumbered by traditional rules. I’m looking forward to seeing what I can learn from the initiative.

Think – and act – differently and we have the chance to deliver on the promise of value-based care: providing the right care in the right place, at the right time.

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