With the objective of achieving better outcomes and improving the efficiency of care delivery in health systems, value-based healthcare (VBHC) has the potential to bring about considerable change in the way healthcare systems operate. It is gaining attention with policymakers, payers, healthcare professionals and care providers worldwide, who are furthering efforts to transition the concept into practical and actionable measures.

VBHC has the potential to strengthen primary care and build integrated health systems for secondary and tertiary care. Establishing true health outcomes and implementing appropriate health payment schemes that promote value creation, it introduces a new patient-centric approach to care delivery, effectiveness, and infrastructure.

Measuring health outcomes against cost of delivery

VBHC is a framework for restructuring healthcare systems with the overarching goal of creating value for patients. While healthcare systems around the globe are currently based on creating access, cost containment, convenience or customer service, VBHC focuses on creating quality for patients. It seeks to define the cost of treatment based on the quality and outcome, thereby disrupting the traditional fee-for-service reimbursement model.

With the goal of lowering healthcare costs, VBHC will transform traditional healthcare infrastructure and redefine healthcare models. It will no longer be about how many patients the hospital can accommodate, how many tests and procedures can be recommended, or how much can be charged for each of these components. Instead, quality healthcare will directly be linked to patient outcomes, resulting in quicker recoveries, fewer re-admissions, lower infection rates and fewer medical errors.

Determining payments based on the value of care delivered

The foundation of VBHC is based on several core components. These components will define the approach, irrespective of the scale of implementation, the system’s level of development, or the available resources.

The primary component of VBHC is the understanding and intent to move away from healthcare payments based on the volume of services delivered or products utilised. Healthcare payments, instead, would be solely based on the value of care delivered. Data systems and analytics would also function as a core component of VBHC by enabling visibility and accountability for value and providing the necessary intelligence for decision-making.

Meeting the need for more holistic care, bundled care will also be integral to VBHC. It will define care requirements and time frames and bring together related activities and processes. On a deeper level, integrated care through optimal treatment pathways will help improve care efficiency, particularly for patients with diseases at different stages of progression and with varying comorbidities.

Once bundled care, integrated pathways and outcome measures are defined, it will become important to create appropriate provider payment models and access to align incentives and reward stakeholders for creating value. Integrated provider networks would also contribute towards VBHC by enabling healthcare activities to occur in settings best suited to achieving desired outcomes.

Creating impact through patient-centric healthcare models

A fee-for-service system reimburses providers à la carte, making healthcare a factor of costs (for patients) and revenues (for providers). It rewards stakeholders based on quantity as opposed to quality and focuses on generating volume as opposed to value. VBHC, on the other hand, carefully designs the financial incentives for stakeholders, prompting them to increase utilisation and quality, and achieve improved performance.

The foremost impact of VBHC will reflect in the cost of healthcare. In the current structure, cost of healthcare is high, often without a corresponding improvement in health. Under VBHC, payments will be based on the quality of care and subsequent improvements in the patient’s health, creating a new standard of value not just for care providers but also for insurance companies. VBHC will also mean that patients, who are often frustrated and confused in the current system, will be at the centre of care delivery and be supported by an integrated system and coordinated teams.

VBHC will enable healthcare to take a proactive approach, as opposed to the current reactive approach. With the emphasis on keeping people healthy, the infrastructure would work towards prevention of diseases and focussed treatment of chronic conditions. Data would no longer remain trapped inside massive repositories and sites, but be utilised to identify specific health risks, improve care coordination, and enhance operational efficiency. Care providers would be empowered by innovative technology, access to data, and financial incentives to coordinate care across the entire healthcare system.

Massive potential to address healthcare challenges in India

Struggling to meet the needs of over a billion people, most of whom are unable to bear the burden of high healthcare costs, India’s healthcare infrastructure offers great potential for the application of VBHC. The challenges to quality care in India are on various levels. The infrastructure is plagued with over-crowding, under-funding, and an acute shortage of resources. As much as 80% of the country lacks access to basic healthcare services, and the system is characterised by high out-of-pocket expenses, a strong rural-urban divide, and an inability to meet the rising population’s healthcare needs.

As the U.S., Colombia, and other Western countries come closer to aligning their healthcare systems to the VBHC model, India offers a unique opportunity for its implementation. A step in the direction was taken through the proposed clinical establishments Act, which seeks to regulate all clinical institutions in the country. Electronic health records, evidence-based guidelines for healthcare, and national disease registries are also early-stage components of VBHC. Working towards an integrated effort to improve healthcare and reduce costs, VBHC can help reform healthcare in the country by developing a mechanism that rewards those who help achieve these aims.

Views are personal. The author is chairman & CEO of HealthCare Global Enterprises Ltd.

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