Value-based healthcare: end or trend?

Policymakers around the world have gradually introduced the concept of value in care models and pricing schemes. Some in the health community find hope in value-based models and see them as a possible solution to the structural problems of care models today; others doubt that implementing a value-based system is realistic. In the case of Spain, recent improvements make it difficult to determine whether value-based healthcare is possible, but different issues, such as the lack of transparency in the government, make it unlikely that the full transition to value will happen in the short-term.

The value transition in Spain

Our current health care systems are approaching a dead-end situation: rapid demographic change, aging population, changing lifestyles and growing health expenses place countries in urgent need to shift towards more efficient and sustainable care models and pricing schemes. The global healthcare community is desperately searching for health policies that could help transition from acute to chronic care; patient-centred models to meet the upcoming needs and demographic structures that will be in place by 2050. In the midst of policy-talk, value-based healthcare (VBHC) has taken the spotlight. Not only has it caused stir in Europe – mainly in the context of pricing and reimbursement schemes – but, across the pond, just a month ago during a US Senate hearing on prescription drug prices, industry representatives stressed the need to shift to a pricing system where price and value are aligned.

What is value-based healthcare?

But what is VBHC and is it really the silver bullet to all structural problems of care systems? The truth is that, despite all the buzz, the majority of experts agree on the fact that implementing value-based healthcare presents many challenges. The route to the value transition is not an easy one: value models are still under constant development, they rely on data that has become available very recently and determining what is value continues to present an obstacle. Most importantly, in order to place value in the centre of the health models, the very structures of health provision and, at least in Spain, the concept of public healthcare, the mentality of governments and even the very structures of the welfare state must undergo major changes.

In this context, we wonder, is value-based healthcare an attainable reality or is it just another policy that will end up going down the drain?

Quality at the core

The framework of value-based healthcare was first laid out by Harvard Economist Michael Porter. VBHC is a payment and delivery model by which providers of health services – including pharmaceutical companies, hospitals and doctors – are paid based on a patient’s health outcome. The main difference is that, whereas in the present system we pay per volume or per service provided, in a value-based system the unit of cost is quality. This is:

Value = quality / cost

The trick is that, in order to increase value, we will need to optimise quality at the lowest possible cost. For example, the focus will no longer be how many surgical procedures are carried out in a period of time, or how many patients can a physician examine in an hour, but how much quality can be delivered at the lowest cost.

Trying to optimise quality is not a new idea. The difference in VBHC is that it builds a care model by using parameters that measure value and creates a paying system that is based on these parameters. Identifying and measuring the “variables of value” is no easy task: the outcomes that matter for a particular patient are measured, then consolidated on a population segment level, and then these measurements need to be applied in the entire health pathway for many similar patients, who will receive a ‘tailored’ solution for their kind of pathology and patient-characteristics. The underlying challenge is how to allocate an objective payment, weighed on the basis of how well the system performed for the patient.

The case of Spain: lagging behind…

Despite the fact that many health indicators place Spain in a competitive position with respect to other countries – Spain is the world’s healthiest nation, the undisputed world leader in organ donation and amenable mortality rates are very low compared to EU average – some value experts believe that the health system suffers from structural problems that could seriously limit its ability to shift towards a value-based system in the coming years.

In 2016 the Economist’s Intelligence Unit carried out a study to evaluate the extent to which different countries could transition to VBHC. The results showed that the value race in Europe was mainly led by Sweden, the UK and Germany. All three countries showed different strengths, such as outcome-based payment approach in the case of Sweden and Germany, and integrated and patient focused care in the case of the UK.

Source: The Economist Intelligence Unit, Value-based healthcare: A Global Assessment

The case of Spain is slightly different. The analysis concluded that the country “is a long way from a value-based healthcare system” and that, even though many stakeholders – including insurers, pharmaceutical companies, medical and scientific associations and device manufacturers – show great interest, “there is a lack of interest from central government”. Other problems identified included a “serious” lack of transparency in decision-making which, as was stated, leads to a “major structural barrier” for VBHC adoption. As positive points, the report stated that some of the regions – especially the Basque Country and Catalonia – tried to implement VBHC measures and that health technology assessment (HTA) was very efficient at a regional level.

…but some encouraging accomplishments

On a positive note, since the report was written, the country has shown improvement.  HTA, one of the few positive points mentioned by the study, continues to improve and just recently – on Monday the 4 of March – the Minister of Health María Luisa Carcedo announced at the National Health Council Meeting that the Region of Madrid had finally joined the digital prescription system, making digital prescriptions operable in the entire country. Along these lines, in January 2019, Catalonia was the last region to join the national digital clinical history system, marking a milestone in the digitalisation of the system and taking the collection, comparison and analysis of data and clinical patterns to another level. In addition, the central government’s “lack of interest” seems to have improved. On 20 February, José Martínez Olmos the spokesperson for the Socialist Party at the Senate’s Health Committee – the party currently in the Government – reiterated the fact that the government is trying to work on a payment-by-results agreement for a specific rare disease treatment.

On the down side, other issues such as the “lack of transparency” remain a problem and different MP’s have called upon the government to make the pricing negotiations between pharmaceutical companies and the government public (e.g. written question filed by Marta Sibina -Podemos Parliamentary Group- in September 2018 to call upon the government to make negotiations more transparent). The government seems to be responding to demands of transparency and just two weeks ago the Ministry of Health published the Pricing Committee’s official meeting calendar up until June 2019, a step forward considering that the pricing Committee’s meetings and agenda have traditionally been close-door and confidential, but change is slow.

Value transition, a realistic short-term goal for Spain?

At this point, it is hard to say whether the foundations of the Spanish healthcare system will remain strong enough to enable the value transition or whether the present model can give way to a more efficient care model. Even though some are sceptical and believe that the value transition is not a realistic short-term goal for Spain, others are optimistic and firmly believe in the government’s attempts to implement payment by results in pricing and reimbursement schemes. Right now, the situation of Spain is more uncertain than ever, bearing in mind the upcoming general, regional, local and European elections that will take place in April and May 2019.

Whether the value approach does in fact become the ultimate goal of all care systems, or whether it becomes another failed policy trend to add to the list, is yet to be seen.