The potential of value-based care to reshape future healthcare systems

The potential of value-based care to reshape future healthcare systems

By Naveen Noah Jason

The core concept of Value-Based Healthcare (VBHC) is to provide the best patient outcomes at the lowest costs, but its implementation across the globe varies greatly. The United States has the highest per capita healthcare expenditures — in excess of USD $10,000 and 16.9% of GDP — among the OECD countries, whereas costs are $50–500 for Africa, and $500–2000 for the Middle East. While the African population struggles to access basic healthcare, the United States is also performing poorly by having the worst patient outcomes among the OECD countries.

This illustrates that high healthcare spending doesn’t translate to high-value care; moreover, it shows signs of wasteful spending and low-value care. Hence, at least 15% of future global healthcare spending is predicted to focus on value and outcome models.

Transitioning from focus on product features to disease-based approaches:

Innovation in medical technology has traditionally been dominated by Europe and the United States. But the growth of the middle class in the Emerging Markets Seven (EM7), countries, along with the Middle East and Africa, is spurring the rapid growth of healthcare spending as a percentage of GDP, creating new investment opportunities and prompting a shift of innovation hubs toward the east, to a low- to middle-income population. This has led to a global shift from volume-based models focused on patient numbers or services rendered, toward concepts of a patient-centric system focused on high-value care and patient outcomes.  

The implementation will require setting up integrated practice units targeted toward the full care cycle of the disease condition and its related complications, where care is delivered by a dedicated multidisciplinary team of healthcare professionals all co-located in one center. Following the Implementation Matrix will help map out the associated processes, costs, treatment mix, and expected outcomes for a disease, and provide the maximum value for care.

Measurable patient outcomes:

Care pathways for conditions with routine and standardized procedures vary significantly from those for chronic conditions with complications. Therefore, measuring quality of care using the patient-reported outcomes measure (PROM) is complicated. Furthermore, PROM’s inconsistent implementation and substitution of patient experience instead of patient outcome quality have made this metric inadequate.

Therefore, the International Consortium for Health Outcomes Measurement (ICHOM) assembled over 39 standardized sets of outcomes for major medical conditions. The outcomes are measured against a three-tiered hierarchy. Tier 1 represents the patient health status achieved, tier 2, the process of recovery, and tier 3, the sustainability of health. These sets are currently implemented by individual institutions in various countries, but governments and healthcare stakeholders need to come together to make this a global standard.

The three-tiered hierarchy for measuring patient outcomes. Source: Harvard Business School.

Payer models:

In general, countries with high healthcare spending have governments that pick up the majority of the cost, while out-of-pocket forms a large portion of payments in lower-middle- to low-income countries. The United States has historically favored global capitation and fee-for-service models, while Europe mostly employs bundled payments for a cycle or episode of care. The payment-for-performance model is also fast gaining popularity in Europe, as the payments are not only spread over time, but are also contingent on the proven effectiveness and safety of the treatment.

Many African countries are still dependent on aid and troubled with corruption along with counterfeit drugs. Skilled medical professionals in these countries also emigrate abroad, causing a shortage at home. Although the government and healthcare stakeholders face multiple challenges, they can avoid the pitfalls of the high-cost healthcare delivery models in developed economies. By not being encumbered by massive legacy infrastructure and vested interests, Africa has a great opportunity to embrace and operationalize the VBHC system.

The Middle East has a predominantly fee-for-service model. Unlike the United States, which has a private care delivery system with a combination of public and private funding, and the United Kingdom, which has a public care delivery and funding system, the Middle East has a dual public and private system. Expatriates are covered by private insurance, while citizens are covered by the public system, causing differences in regulations and standards for payers and providers. As the Middle East is in a unique position to implement global best practices in their regulatory bodies without significant industry engagement, they have a great opportunity to implement a VBHC system tailored to their countries.

Reduction in repeat visits for acute conditions:

Hospital readmissions for acute conditions are considered an important performance indicator for both clinical practice and health service management. With VBHC, the focus is promoting rapid patient recovery and preventing chronic disease. This leads to improved near- and long-term health, resulting in reduced patient visits. 

Implementing the VBHC system requires significant transparency and leadership from the provider community, with possible short-term profit sacrifice. But this is the only way forward that will benefit all stakeholders of the healthcare system.

If you have any questions or would like to know if we can help your business with its innovation challenges, please leave your info here or contact Jeremy Schmerer, Healthcare & Life Sciences Lead, directly at or Linda Cohen, Strategic Accounts Manager at

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