The idea of value-based purchasing in health care has been around since the 1990s, when 3 researchers named Meyer, Rybowski and Eichler wrote,
“The concept of value-based health care purchasing is that buyers should hold providers of health care accountable for both cost and quality of care. Value-based purchasing brings together information on the quality of health care, including patient outcomes and health status, with data on the dollar outlays going towards health. It focuses on managing the use of the health care system to reduce inappropriate care and to identify and reward the best-performing providers. This strategy can be contrasted with more limited efforts to negotiate price discounts, which reduce costs but do little to ensure that quality of care is improved.”
In the past fourteen years since this definition was offered in the book, Theory and Reality of Value-Based Purchasing, many pioneers have ventured into the value-based health care environment. This week, three reports have been published by influential sources which together signify we’ve entered the Age of Value in Health Care in the U.S.
The reports are:
BCG notes that value-based health care sets the table for health reform around the world, in Australia, Canada, Germany, Hungary, Japan, the Netherlands, New Zealand, Singapore, Sweden, the United Kingdom and increasingly, in the U.S. Some countries are further along than others, based on BCG’s “maturity assessment framework” which sorts out countries’ progress in getting to the nirvana of value-based care. The key components of value-based care, BCG says, are
- Clinician engagement in dedication to clinical improvement
- National infrastructure of common standards for tracking diagnoses, treatments and outcomes, with a limited number of shared IT platforms
- High quality data because value-based health care is data-driven and requires good data on which to based decisions for both individual health and population-level policy and treatment decisions
- Outcome-based incentives aligning stakeholders on the same page including clinicians, payers, and suppliers of medical goods (drugs and devices, notably).
Among countries studied, BCG calculates that Sweden is the most mature on the value-based continuum among the countries studied, followed by Singapore, Canada, the U.K., Australia, New Zealand, and Japan. The U.S. has a significant way to go in meeting the data use and data quality criteria. The U.S. scores above the average for clinician engagement and national infrastructure, although these scores are on the low side, as well.
The IOM’s Checklist report is based on leading U.S. health institutions’ experience in applying value-based health concepts to a broad range of projects, such as adopting continuous improvement programs, EHRs, clinical guidelines, supply chain improvements, connected health care, shared decision making between doctors and patients, population health management, and patient safety initiatives. Based on these various programs’ successes, the IOM distilled lessons learned into a 10-point checklist:
- Governance priority
- Culture of continuous improvement, both “foundational elements”
- IT best practices
- Evidence protocols
- Resource utilization, 3 aspects of “infrastructure fundamentals”
- Integrated care
- Shared decision making
- Targeted services, 3 aspects of “care delivery priorities”
- Embedded safeguards
- Internal transparency, 2 aspects of “reliability and feedback.”
The top-line of the Forbes/Allscripts paper is that most CEOs in the U.S. health system believe that there’s an “imminent shift” in the U.S. moving from volume to value. About 40% believe that value-based purchasing could be a disruptive innovation, but another 40% are in the wait-and-see mode, not convinced that VBP will disrupt U.S. health care. Still, 39% of all CEOs forecast that at least 25% of their revenues will come from VBP sources within 5 years.
As with the other 2 reports, clinician engagement is seen as a top priority by health care CEOs — not engaging doctors is a real barrier to successfully implementing VBP in the care setting.
IT infrastructure, communications and data liquidity, too, will be key success factors for VBP to be delivered, CEOs said. Data will be crucial, too, for providers to be able to identify high-resource utilizing patients — one of the hallmarks of VBP for managing high-cost patients with multiple chronic conditions.
Health Populi’s Hot Points: In these reports, the role of the patient plays out in subtle ways. In the Forbes/Allscripts report, a majority of CEOs recognize that “improving patient education and engagement” is a major challenge in VBP, along with nearly one-half noting “improving patient/family experience and satisfaction.”
CEOs whose CFOs have been stuck with high levels of consumer indebtedness due to high-deductible health plans understand that patients haven’t universally been “good consumers” when it comes to judging quality of services or value. The Forbes/Allscripts report says, “That’s a flashing warning sign for those that believe that…consumer-driven health plans will automatically drive value-based purchasing on the part of the patient.”
Thanks, Forbes and Allscripts, for telling the truth about how HDHPs and CDHPs have rolled out. Scott Hensley wrote last week in NPR’s Shots blog
that more Americans are checking prices before getting health care. Knowing prices, though, has been leading millions of consumers to avoid getting health care, filling prescriptions, or checking into ambulatory centers for necessary tests.
My earliest work with value-based health care was with a pharmaceutical company whose managed markets team successfully worked with a self-insured employer to have a copayment for a chronic disease maintenance medication dropped to “zero.” This had the impact of substantially increasing medication adherence, which led to better outcomes. It was an elegant and simple solution that drove population health in that employer group.
For best effect, value-based purchasing in health care necessarily puts the patient at the center.