In this mm.Blog post, we intend to share our understanding on one of the rising important topics of healthcare industry – value-based healthcare or VBHC. We will  summarize and share an overview of why VBHC is becoming more and more popular in recent days. Our insights are based on the research done, through reviews of various literature, online articles and industry insights.

Definition of value in the context of healthcare

Providing high quality health benefits for every Dollar or Euro spent is one of the most important goals for any healthcare system. Improving patient outcomes is what finally matters. Economic sustainability of healthcare can significantly improve when value benefits can be achieved for patients, payers, providers and suppliers. Value should define the framework for performance improvement in healthcare. Porter ME., 2015 defined ‘Value’ in healthcare as the patient health outcomes achieved per dollar spent.

VBHC is more concerned with quality than quantity of care. It can be defined as a healthcare model based on compensation for outcomes. This system differs from the traditional fee-for-service (FFS) or quantity of care system. In traditional systems, medical providers are on a pay per use type of compensation structure.

Why Value based healthcare is gaining popularity

According to research from Boston Consulting Group (BCG), VBHC approaches deliver higher-quality patient outcomes at the same or lower total cost for a given condition. VBHC is gaining momentum as the proliferation of technologies and capabilities in health care informatics make it possible to collect outcome data and to share the information broadly with clinicians and the public.

Some of the results are:

    • Patients know with greater certainty which physicians and hospitals deliver better care at the same or lower cost, as well as which drugs, procedures and medical devices would work best for them.
    • Payers reimburse based on outcomes and push therapies towards care delivery with better outcomes.
    • Providers compete based on achieved medical outcomes, thereby attracting more patients, referrals and payer support.
    • Suppliers take a more holistic approach, strategically selecting where to play and what to offer to improve outcomes.

For a successful example one can name OrthoChoice in Stockholm, one of the first big scale bundled payments in the world. In 2008, all major hospitals in the county of Stockholm signed the contract for a bundled payment for low-complex hip and knee replacements. The bundle includes the full cycle of care, from pre-operation to follow-up and complications that occur as a result of the surgery. This way, the bundle rewards reduced levels of complications and infections. (source: VBHC-Thinkers-Magazine 2019)

A comparison of progress across countries

In Europe, Sweden has been named the leading pioneer in VBHC in a study by The Economist in 2015 and 2016. Many organisations are actively implementing VBHC, such as the University Hospital in Uppsala and the Sahlgrenska University Hospital in Gothenburg. Sweden’s national registry has been one of the key drivers.

According to an assessment conducted by BCG for VBHC implementation, Sweden emerged top on list, followed closely by Singapore, while Germany and Hungary came in last. The BCG maturity-assessment framework uses four success factors to evaluate a country’s progress toward value-based health care on two broad dimensions: “Clinical engagement”, “National Infrastructure”, “Data quality” and “Outcomes based initiatives”.

The chart below combines a top-down assessment of a summarized factor national enablers of VBHC (clinician engagement and national infrastructure) with a bottom-up assessment of data quality and use at existing disease registries across 12 major health conditions. It maps countries and their progress in these general factors.

Going into more detail, a country’s performance on each criterion is rated on a scale of 1 to 5, with 1 representing low readiness and 5 representing best practice track success factors, as well as a score for overall readiness, which is the unweighted average of all 35 criteria. In this approach, Germany is at the bottom of the list, owing mainly to limited access to high-quality data and poor data utilization.

The diagram below displays the average score in the four broad categories to track the success factors, as well as a score for overall readiness.

Benefits through VBHC strategy

Several benefits come from the introduction of a VBHC strategy to all the involved stakeholders, such as patients, healthcare providers and payers, as well as to society. VBHC models offer better health outcomes to patients, reducing the costs associated with the full-care cycle, such as those related with hospitalizations and use of medical resources. In these models, healthcare providers (e.g., physicians, pharmacists and nurses) are more efficient in delivering and managing patient-oriented care and more likely to engage patients in achieving the recommended goals. In this way, patients could reduce attributable risk factors, through prevention and awareness campaigns, and achieve better early clinical outcomes by receiving early diagnoses and/or targeted therapies. Consequently, healthcare systems are less constrained in terms of costs and the required investments are more realistic and effective, focused on specific needs. The following visualization shows the relations and activities among relevant stakeholders. (source – Redondo, P et al., 2019).

Added value by medical magnesium

Through our product platform mm.X, medical magnesium is contributing to VBHC strategies in collaboration with stakeholders so that more value can be provided to the patients. Our vision is to significantly improve surgical therapy of patients avoiding the gap between the patients’ desire for best treatment and the general focus on cost reduction:

  • Improving the quality of care for a target patient population requiring surgical treatment eliminating risks of a required intervention (risk of infection, rehabilitation, time off work).
  • Appropriately reducing the costs, growth in expenditures of payors without reducing the quality of care for a target patient population requiring surgical treatment.

The majority of treatments for fractures are currently using conventional metal implants (e.g. plates, screws and nails). These implants used to be made of stainless steel or titanium, requiring a removal surgery in many indications.

With the help of advancement in product research, medical magnesium has introduced the mm.X platform of products based on magnesium technology to combine stability and bioabsorption. The technology makes removal surgeries obsolete, as the fracture gets stabilized to full recovery before the implant dissolves in a controlled manner. In several in-vivo trials, mm.X has shown good results, which indicate a potential rollout to more products. Therefore, we believe in contributing to a VBHC through our mm.X implant technology.

Author: VR/FC

Vos, D.I. and Verhofstad, M.H.J., 2013. Indications for implant removal after fracture healing: a review of the literature. European Journal of Trauma and Emergency Surgery, 39(4), pp.327-337.
Redondo, P., Ribeiro, M., Machado Lopes, M.B. and Gonçalves, F.R., 2019. Holistic view of patients with melanoma of the skin: how can health systems create value and achieve better clinical outcomes?. ecancermedicalscience, 13.
Soderlund, N., Kent, J., Lawyer, P. and Larsson, S., 2012. Progress toward value-based health care: lessons from 12 countries. The Boston Consulting Group, ed. Valuebased Health Care.
Porter, M.E. and Guth, C., 2012. Redefining German health care: moving to a value-based system. Springer Science & Business Media.
Nilsson, K., Bååthe, F., Andersson, A.E. and Sandoff, M., 2017. Value-based healthcare as a trigger for improvement initiatives. Leadership in Health Services.
Porter, M.E., 2008. Value-based health care delivery. Annals of surgery, 248(4), pp.503-509.