This week’s blog is by our colleagues, Elisabeth Aloy and David Pistor, a Director and Senior Manager who specialise in life sciences and healthcare within the firms consulting practice in Switzerland. The article recently appeared in Scrip1 and outlines the five design principles that should be considered in order to create a successful value based care pilot.
Value-Based Healthcare in Europe
Most healthcare systems are battling with the challenge of delivering both better patient outcomes – in an environment of increasing prevalence of diseases – while managing escalating costs. So how can we ensure the best possible care and access to innovation for patients, while being mindful of these costs and healthcare budget pressures?
In the past decade, the introduction of Health Technology Assessments (HTA), and the impact of austerity measures, have started to address standards of care and budget pressures respectively (Figure 1). However, the value created by services and more holistic solutions are often overlooked in the healthcare delivery equation.
As mentioned in Deloitte’s 2016 publication Facing the tidal wave: De-risking pharma and creating value for patients, solutions combining new drugs, devices, processes and digital platforms (e.g. patient portals, registries), are more likely to improve performance and reduce costs than medical innovations alone. Yet, the impact of the treatment, interventions and patient experience of a medicine are typically not assessed in a robust way. They are also not usually considered as a key performance indicator when contracting or selecting a supplier.
Healthcare measures are often standalone, consequently failing to optimise both care and value for money. However, new thinking and public interest in relation to the value of paying for innovative pharmaceuticals has recently been sparked. For example, a major pharmaceutical’s gene therapy technology has been priced at over half a million dollars, but with money back guaranteed if it is deemed ineffective. Another has recently entered performance-based agreements with insurers (for testing the ability of its heart failure therapy to cut down on hospitalisations and improve real world patient outcomes.
The recognition of the need to adopt a more value-based care (VBC) approach to healthcare is escalating. It has even led to a panel discussion among life sciences leaders at this year’s World Economic Forum in Davos.2 The wide-spread adoption of this concept is seen as increasingly likely, but before it can be effective more needs to be done to overcome challenges such as effective data sharing and better patient engagement.3
VBC aims to shift payment and reimbursement models from funding activity or volume of care providers to agreed measures of value delivered to patients. The concept of value captures evidence-based clinical, social and economic benefits. VBC can be deployed at the ward, hospital or even national level, and the journey can be structured into four action step (Figure 2).
VBC is being tested successfully in a real world environment, but only in small scale experiments. For example, three years after their introduction in Stockholm, bundled payments for hip and knee replacements led to a 26 per cent reduction of complication risks and a 20 per cent reduction of costs, whilst significantly decreasing waiting times and resource utilisation.4
Based on an assessment of both successful and aborted trials, we believe that there are five design principles to ensure a successful VBC pilot:
- establish clear collaboration between stakeholders (innovator, care giver and the payer) with defined goals and roles
- define outcome indicators with clear target definitions (based on clinical end points, economic and social outcome) and measurement methodologies for the therapeutic area
- establish simple and viable value-based procurement models
- ensure that stakeholders are incentivized, in order for lasting adoption of new ways of working. These include tracking and reporting of health indicators and regular analysis of patient outcomes
- design detailed operating models from the start, ensuring comprehensive testing and the ability to scale up.
VBC remains a challenging transformational journey, paved with complexity, potential high costs, implementation risks and a cultural change for all stakeholders engaged. But success is possible. For example, Sweden has managed to develop value-based reimbursement and monitoring systems for 70 per cent of the population in eight therapeutic areas.5 This serves as a good example of the motto "thinking big and starting small", and can provide payers and suppliers the impetus to initiate small pilots in order to estimate the potential value for patients and society VBC can have.