The Value-Based Healthcare Strategy – What's New? and where are we Going?

Value-Based Healthcare is a leading strategy that shifts from the paradigm of measuring volume to measuring patient outcomes. Value-based healthcare (VBHC) is a patient-centered model that emphasizes the improvement of health outcomes for groups of patients (e.g., diabetes patients) and for individual patients. Rather than emphasizing the increase in volume of services delivered, the VBHC strategy strives for improvements over time and comparisons in health improvement. Unlike the traditional fee-for-service strategy, where providers are compensated based on the number of procedures they performed, VBHC rewards providers for quality, efficiency, and improved patient outcomes. What are the core principles of VBHC?  

VBHC encompasses several foundational principles. The key principle for success is outcome measurement.  It is a data-driven strategy regarding decision-making, cost-effectiveness, and patient engagement. Providers assess care quality using performance indicators such as readmission rates, complication rates, and overall patient satisfaction. Some insurers even measure provider satisfaction. These data points enable healthcare systems to optimize pathways of care while refining treatments. Insurers strive to shift from fee-for-service systems to VBHC systems that enable insurers to obtain several benefits. 

First, VBHC focuses on prevention, early intervention, and evidence-based treatments, improving the effectiveness of care, making it more personalized and reducing the burden of rising chronic diseases, and complication rates.  Also, VBHC reduces unnecessary procedures, hospitalizations, and emergency visits, leading to reducing costs and enhancing the efficiency of resource allocation. With insurers linking incentives to patient improved health, providers are encouraged to collaborate and deliver high-quality, integrated holistic care. For example, to create continuity of care, home hospitalizations are offered to patients requiring collaborations between community care and hospital care. As a result, since VBHC centers the patient, the experiences of patients are better through improved communication, higher engagement, and continuity of care. 

When patients receive more personalized and coordinated care, they are more engaged and adhere to their treatment plans. VBHC encourages integration and collaboration among healthcare professionals across disciplines to ensure seamless experiences of patients. The focus on efficiency and effectiveness drives the adoption of new health technologies, such as digital health tools and AI-driven analytics to enhance care delivery. 

Despite its many benefits, the shift from fee per service to VBHC is very challenging. VBHC is an excellent vision, yet we have a long way to go until this vision is fully implemented.

Measuring value can be complex, as different conditions and patient demographics require varying outcome indicators. Unless there are agreements on outcome indicators, current reimbursement models that are suitable for VBHC at national levels are lacking. Also, regulatory frameworks intended to support value-driven initiatives are still evolving. Healthcare providers who are accustomed to traditional reimbursement models may resist the shift toward outcome-based payment systems which must use monitoring heavily, hence creating resistance to change. Payers and insurers must redefine payment models to align with value-based incentives. To date, there are difficulties in measuring outcomes, and a great need for advanced health IT systems, requiring adept infrastructures. Effective VBHC requires comprehensive data collection, which demands investment in electronic health records (EHRs) and interoperability among healthcare institutions. An effective implementation requires seamless collaboration among hospitals, primary care physicians, specialists, and allied health professionals ensuring comprehensive management of patients and their records. Table 1 compares  between the Fee for service strategy to VBH strategy.

Feature	Fee-for-Service	Value-Based Healthcare
Definition	Providers are paid for each service, test, or procedure performed.	Providers are paid based on patient health outcomes and quality of care.
Payment Model	Payment is tied to the quantity of services provided.	Payment is tied to quality and effectiveness of care.
Incentives	Encourages a high volume of procedures and services.	Encourages preventive care and improved patient health.
Focus	Treating illnesses and providing more services.	Preventing illnesses and enhancing overall health outcomes.
Risk Distribution	Providers bear minimal financial risk.	Providers share financial risk and rewards based on performance.
Cost Efficiency	May lead to higher healthcare costs due to unnecessary services.	Aims to reduce costs by avoiding unnecessary treatments and hospitalizations.
Patient Experience	Patients may receive excessive treatments, sometimes unnecessary.	Patients receive coordinated, holistic care with a focus on long-term health.
Care Coordination	Fragmented care, with specialists and hospitals operating independently.	Integrated and collaborative care across providers.
Outcome Measurement	Based on number of services rendered.	Based on patient health improvement and satisfaction.
Sustainability	Can strain healthcare budgets due to rising costs.	Aims for long-term sustainability by improving efficiency and reducing waste.

Table 1. A comparison between the Fee for service strategy to VBH strategy

Bridging the Chasm

To overcome the challenges and implement VBHC, health systems integrate health innovations. Establishing coordinated care models ensures smoother transitions between primary care, specialist services, and hospital-based care. Health systems are also moving toward bundled payments and performance-based incentives to align the financial structure of incentives for the system and providers with value-driven care. For example, risk-sharing contracts encourage providers to deliver cost-effective, high-quality care. Heath systems also initiate patient education programs, and remote monitoring technologies to enhance patient engagement and self-management. Last, providers are trained to empower patients through digital health tools and transparent communication, to enhance their adherence to their care plan and capacity to take responsibility and self-manage their chronic illness.

Innovations to the Rescue

Health systems leverage big data and AI-driven analytics to both predict and track patient outcomes more effectively. Predictive analytics and AI-driven insights can help track patient progress, identify at-risk populations, and personalize treatment plans. As data analytics, AI, Big Data, and personalized medicine continue to advance, VBHC is becoming more refined and gradually adopted. Governments and private payers are increasingly investing in VBHC to ensure that I the future healthcare systems will continue to emphasize quality, efficiency, and patient well-being over volume-based incentives that may be unrelated to high quality care and improved outcomes. The integration of digital health solutions, wearable technology, and predictive analytics will further strengthen VBHC, making healthcare more proactive and patient-centered, making the work of providers more meaningful.

Governments and healthcare authorities should promote VBHC through supportive policies, funding initiatives, and performance-based reimbursement models.

Conclusion 

VBHC represents a paradigm shift in the healthcare industry, focusing on quality, efficiency, and patient well-being. By prioritizing health outcomes over the volume of health services, VBHC can foster a sustainable and effective healthcare ecosystem. VBHC continues to evolve with technological advancements and policy reforms. The integration of AI, telemedicine, wearables, and blockchain for data security will further enhance its effectiveness. As more healthcare systems embrace the VBHC strategy, the future promises improved health outcomes, cost efficiency, and a more patient-centric approach to healthcare delivery. While challenges impede its widespread adoption, effective strategic implementation, technological advancements, and policy support will drive its success, ultimately transforming the way healthcare is delivered and experienced by both providers and patients.

Additional reading 

Deerberg-Wittram J, Lüdthe L. Value-based healthcare delivery in diabetes. The Boston Consulting Group, Medtronic. 2016 Sep:1-6.

Fernández-Salido M, Alhambra-Borrás T, Casanova G, Garcés-Ferrer J. Value-based healthcare delivery: a scoping review. International journal of environmental research and public health. 2024 Jan 25;21(2):134.

Teisberg E, Wallace S, O’Hara S. Defining and implementing value-based health care: a strategic framework. Academic Medicine. 2020 May 1;95(5):682-5.

Vilhelmsson A. Value-based health care delivery, preventive medicine and the medicalization of public health. Cureus. 2017 Mar 1;9(3).