Improving the performance of any kind of organization relies on the shared goals and interests of all stakeholders. Value means the preeminent goal and it refers to the output achieved relative to the input (cost) incurred. We need to measure value to understand the performance of our organization as an essential approach for future improvements.Value in healthcare has same yet unique concept. It’s not a cost reduction, it should have imped the framework for performance improvement in health care. Institution of Medicine identifies 6 goals of healthcare delivery system: Safety, patient-centeredness, efficiency, effectiveness, timeliness, and equity. Therefore, it should be revolving around the customer, not the supplier; it’s more related to the patient health outcomes attained on each dollar spent. Value is an essential element in healthcare industry, as it reflects what ultimately the customer (the patient) wants which can’t be achieved unless there is a unification all the stakeholder’s efforts. Once the value improves, all stakeholders; patients, payers, insurer, providers, and suppliers can also benefit. Value implies different goals addressed in any healthcare settings, such as; quality, cost containment, profitability, safety, patient-centered care, patient satisfaction, convenience, improving equity and accessibility.
How does value based healthcare reduce costs?
To generate an effective healthcare business model, we should consider how to sustain in the market by getting more financial stability. This sustainability can never be attained unless we provide value-based healthcare. Value in healthcare should be measured by the outcomes, not the inputs, and also not in the outputs which refer to the volume of services delivered. “More care is not always better care, that’s why we should shift our healthcare business model from the volume-based services to value-based ones”. Measuring value is more related to the outcomes gained vs the cost needed, however, cost reduction without achieving the desired goals is very dangerous.
Value increases when better outcomes are attained at lower cost and outcomes improvement is a way to reduce costs; for instance early detection of disease will help using less invasive care and lead to faster recovery or fewer complications. Nevertheless, unnecessary use of screening is inefficient and will be value destructive. To reduce cost, we should spend money on high-value services, such as preventive or early stage of care. Whereas shifting the service from one provider to another or from one payer to another, won’t add any value, but will increase administrative expenses.