Shifting to a Value-Based Approach

What is value and how do we define it? In a panel discussion led by moderator Jean-Paul Gagnon, former senior director, Sanofi-Aventis, participants were asked to analyze the ways in which healthcare can shift from a fee-for-service model to one that focuses on value. He was joined by panelists Dan Sontupe, executive vice president, Payer Marketing and Market Access, The Cement Bloc, and Pamela Morris, director, Syndicated Research, Zitter Health Insights.

Mr Gagnon began by stating what is well known in the healthcare community: the United States healthcare system is transitioning from the outdated fee-for-service model to one that focuses on value-based outcomes. Healthcare systems, hospital providers, and suppliers are all taking on more risk and responsibility for delivering defined services at pre-determined prices for quality levels to specific populations. This shift is important to improve quality and also for improved accountability in hospitals or other health systems to better manage the medical services they provide. As well, providers want to be rewarded for quality, while payers believe shared risk arrangement will drive results. Payers also want to shift performance risk for care quality and costs to providers.

Mr Gagnon explained that although there are many “value” based terms out there—everything from "value-based approach" to "value-based leadership" and "value-based pricing"—perhaps the most important and meaningful is value-based contracting (VBC). VBC involves payment based on indicators of value such as patient outcomes. It also is critical to healthcare organizations’ leaders, health systems’ ability to become established in their markets, and crucial if stakeholders are to achieve the triple aim.

How are hospitals and health systems defining value, and how are they assessing their readiness for VBC? Mr Gagnon said they must ask themselves questions such as: what infrastructure resources are needed for population health management? What types of arrangements should we accept? What is our plan for risk contracting? How do we measure healthcare outcomes?

There are also 3 “musts” he suggested for implementing VBC:

• Physician engagement—align physicians' clinical & financial interests with hospitals or other health systems
• Transparency and accountability
• Performance measurement and improvement

For pharmaceutical companies, they must demonstrate real, measurable patient health outcomes. They should work with payers to provide evidence linking medication payment to improved patient outcomes rather than volume. They should also look to health technology assessments, patient reported outcomes, CER, and cost effectiveness tools to show value. It is also essential to align incentives between pharmaceutical companies and purchasers. Ms Miller suggested VBC is increasingly being seen in specialty pharmacy organizations seeking to compete with their market leaders.

Mr Sontupe said that VBC has to be looked at more than just a transition or negotiation between parties, stressing the importance of dialogue. Building and establishing value requires programs and solutions. Value is not just “dollars back,” he says, it has to be more than that

“The value equation has a lot of variables that we have to put together; it’s always going to have cost, efficacy, safety, there’s always going to be that,” said Mr Sontupe. “We have to talk about creating and building solutions that show how we can work with these organizations, show that’s there’s always going to be a win-win [situation].”