Value-Based Healthcare: Improving Patient Outcomes While Controlling Costs


How can healthcare systems simultaneously improve patient outcomes and reduce overall spending? While this may seem like a paradox, this is exactly the concept behind “value-based healthcare” (VBHC). Having been around since 2006, value-based approaches to healthcare have seen tangible results that could play a crucial part in rejuvenating healthcare systems devastated by the effects of a global pandemic. Many healthcare systems have successfully adopted some of the concepts central to VBHC but one of the barriers to its implementation remains its complexity. How can hospital organizations better understand value-based approaches to healthcare? And what benefits can they expect with successful implementation of VBHC concepts?

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Value-based healthcare: Improving patient outcomes while controlling costs
Modern healthcare is an intricate balance between effective treatment and cost. With both healthcare providers and payers continually seeking to optimize investments, Harvard economist Michael E. Porter introduced the concept of value-based healthcare (VBHC) in his landmark book, Redefining Health Care: Creating Value-Based Competition on Results, co-authored by Elizabeth Olmsted Teisberg. Published in 2006, this work was based on ten years of research into the US healthcare system where spending per citizen exceeded all other nations but patient outcomes in many areas were shown to be worse. The introduction of a VBHC concept aims to improve health outcomes while simultaneously reducing cost. 1

VBHC bases payments to healthcare providers on patient outcomes rather than the more traditional fee-for-service (FFS) model. Under the FFS system, the patient or insurance provider pays for every diagnostic test or medical procedure even if it is not successful, which does not necessarily put the patient’s interest first. VBHC is fundamentally a way to increase patient health and satisfaction with care, while helping to control and reduce costs - and it’s a win-win scenario. Through value-based approaches to healthcare, patients, healthcare practitioners, procurement and payers all benefit, making it attractive to modern health systems.

Measurable patient outcomes in a VBHC payment model
Although introduced almost 15 years ago and seen by health systems as a priority, adopting VBHC comes with its challenges. The concept itself is a highly complex idea that necessitates vast procedural change at all levels for widespread adoption, meaning that, understandably, VBHC is yet to be fully installed in any country. Instead, many systems around the globe continue to take steps toward this way of thinking, focusing on the patient-centric approach that sits at the core of a value-based approach to healthcare.

As the concept is based on the value of healthcare provision, health outcomes must be measurable. This is obviously far from straightforward for many reasons, including the multifaceted nature of treatment pathways, the complexities of managing multiple diseases, and vagaries of different administrative systems. Additionally, to measure outcomes, all aspects of treatment need to be considered, since while a single intervention in isolation may be successful, the overall treatment outcome may not.

To navigate these challenges, a number of systems are used to measure outcomes and improve service delivery, such as Net Promoter Scores—used as a measure of patient experience—and Patient Reported Outcome Measures (PROMs), which measure clinical outcome and quality of life.

To help accelerate the adoption of VBHC approaches, the European Institute of Innovation & Technology (EIT) Health launched a new guide 2 in May 2020 to show healthcare providers how to improve patient outcomes and reduce wasted expenditure. It has been estimated that as much as 30% or more of healthcare spend is wasted on avoidable complications, unnecessary treatments or administrative inefficiencies. 3 Tackling this waste would therefore be a major benefit for governments, hospital managers and insurance providers. Even more so as budgets are increasingly squeezed by ageing populations and the ability to treat more conditions.

Understanding value in healthcare
As healthcare systems move towards a more value-based approach, understanding value both in terms of patient outcome and cost is critical. At Olympus, we like to think of four dimensions – efficiency, economics, safety and reputation – that reflect the key needs of healthcare providers. While we understand that these four areas are closely interlinked, they also each hold their own significant value and considerations. We work with our healthcare partners to help enhance these four dimensions in a way that works for each individual organization.

Maximizing operational efficiency and workflow management
In terms of implementing VBHC approaches, efficiency is one of the main considerations. Efficiency in the care pathway can positively affect clinical outcome—and value—for the patient, healthcare provider and healthcare payer. For example, from the patient’s perspective, repeated hospital visits carry both time and travel cost implications, and extended treatment timelines may have an associated discomfort and psychological impact.

For healthcare providers looking for operational efficiencies, process and workflow management is an important factor. Repeat patient visits mean additional healthcare practitioner time, extra hospital costs, and reduced patient throughput with resulting delays for other patients. Minimizing operational gaps and enhancing resource allocation at management level helps healthcare organizations benefit from more efficient processes.

Working together, Olympus can help with providing innovative technologies that offer procedural efficiencies. The PLASMA technology, for example, is an advanced energy system that offers proven therapy for endourological applications such as the treatment of non-muscle invasive bladder cancer (NMIBC) and benign prostatic hyperplasia (BPH). As the prevalence of BPH rises in the ageing populations, the burden on healthcare systems and society of this condition is expected to increase too. PLASMA technology is associated with enhanced clinical outcomes and patient comfort, as well as reduced overall cost of care. In fact, the National Institute for Health and Care Excellence (NICE) in the UK has published an updated guidance on PLASMA technology for transurethral resection and hemostasis of the prostate (TURP), where cost modelling estimates a per patient saving of at least 24% combined with equivalent clinical effectiveness and reduced serious adverse events when switching from monopolar to PLASMA technology.

Understanding opportunities for healthcare digitalization to enhance communication between hospitals and patients, and adapting to new ways of working are also important factors for workflow optimization.

Economics: improving cost and cash flow management
When it comes to economics, cost and cash flow management is of course one of the main drivers behind the success of any organization. In the healthcare sector, keeping expenditure low while maximizing patient outcome benefits the running of all hospitals, and is also a key factor in the adoption of value-based approaches to healthcare. Taking advantage of value-based payment models from medical equipment manufacturers is one way that hospitals can benefit while also providing cutting edge technologies. The pay per procedures contract model from Olympus, for example, is a pragmatic approach towards supporting improved outcomes and easier profitability management. Here, customized procedure bundles are defined and linked to a fixed price, so there is no need to solve the complex challenges of outcome measurement. Risk sharing is an important part of this approach and the contract model is open for individual adjustments by hospitals. The payment model is not outcome- but procedure-based. For institutions with a high number of procedures even a flat rate per procedure type might be beneficial. Procedures are tracked in a fully digital and transparent way via software or other connectivity options to aid efficiency.

Considering safety and reputation to help improve patient experience and staff wellbeing
As the competitive landscape in healthcare is evolving, remaining attractive to both patients and staff is an important consideration for hospital management. Procurement and operations stakeholders should consider choosing medical equipment suppliers that make safety a priority, with patient and staff wellbeing a key component to this. Detailed training to enhance clinician confidence and improve patient outcomes is a major contributing factor in helping a healthcare organization become the optimal choice for patients - consistent with the patient-centric approach of VBHC. The new online portal, Olympus Continuum, offers a wide range of professional education programs to help HCPs further develop clinical expertise in specialized areas. Our Medical Expert Training, for example, is available in 46 countries and includes 650 different training courses to help strengthen procedure skills and ensure safe and effective use of our medical systems.

The introduction of new medical technologies that offer more accurate diagnosis and new treatment options help support clinicians to better identify, diagnose and treat their patients. State-of-the-art innovations from suppliers of diagnostics, therapeutics, medical equipment and clinical software have an important role to play in boosting the reputation and competitiveness of healthcare providers. Olympus is committed to patient experience, not just in terms of developing new and ever-evolving technologies, but also in terms of communication, education and management of our systems and services. From revolutionary products like ORBEYE for next-level surgical microscopy and our most advanced endoscopy system, EVIS X1, to medical expert training programs that help healthcare teams to develop, we aim to support dedicated and optimized patient care today and in the future.

This all-encompassing approach to supporting healthcare is consistent with ensuring optimized outcomes throughout the patient pathway, while maximizing efficiency and reducing costs. Working together with industry partners, both clinical and non-clinical stakeholders have roles to play in enabling the improved efficiencies and health outcomes that VBHC is designed to achieve.

Value-based approaches to healthcare are widely seen as an important method for improving the health outcomes of patients worldwide while also controlling runaway healthcare costs. Streamlining the care pathway by optimizing and improving processes in line with the four dimensions can help to enhance the value of healthcare provision for all stakeholders.

And with COVID-19 there is now even more motivation to further reduce waste and improve efficiencies. The pandemic is ravaging government finances, and fiscal plans made by governments one day are often thrown out the next, as new spending and borrowing is required to prop up economies. All the while health systems are buckling under the additional strain of managing the healthcare crisis. Massive programs of diagnostic testing, cancelled procedures and staff sickness on a totally unprecedented scale, mean that it is imperative to generate improved efficiencies while getting greater value from the healthcare spend.