Value-based healthcare: Defining the terms
October 19, 2022
Elizabeth O. Teisberg and Michael Porter’s book “Redefining Health Care: Creating Value-Based Competition on Results,” published in 2006, ignited a global movement to measure value in health. While easy to grasp on the surface, the concept of value-based healthcare (VBHC) contains shades of meaning. Are we talking about value to the patient, the healthcare system, or other stakeholders? How do we measure the success of a healthcare system or intervention? To make things still more complicated, the American and European interpretations of VBHC have a somewhat different focus, and a few related terms sometimes get conflated with VBHC. The definitions below clarify the important concepts.
AMERICAN VBHC MODEL
Outcomes relative to costs (Michael Porter, Harvard University):
This model seeks to achieve “the best outcomes at the lowest cost,”¹ with “competition based on results” as the main driver of change. This requires shifting the focus from what physicians do to what patients need. Within this model, stakeholders implement VBHC through integrated practice units and care delivery, measurement of outcomes and costs, novel payment bundles, and robust technology to support service integration.
Outcomes that patients value (Elizabeth Teisberg, Value Institute for Health & Care, University of Texas at Austin):
This model places more weight on the quality of the outcomes than on cost containment, with an emphasis on “improving the health outcomes that matter to patients.”² While these outcomes do not necessarily coincide with the outcomes most valued by doctors, hospital administrators, or health economists, what matters to patients ultimately creates value for all stakeholders.
Value Math*
*Porter-Teisberg definition, adopted by the Canadian Institutes for Health Information in Canada³
EUROPEAN VBHC MODEL
Multidimensional value: This model encompasses four distinct value goals:⁴
1) Personal value: helping patients achieve their goals
2) Technical value: achieving the best possible outcomes with the resources available
3) Allocative value: achieving fairness in healthcare delivery across patient populations
4) Societal value: acting as a positive force in social health and cohesion
RELATED TERMS
Patient partnership approach to care: This VBHC-adjacent term describes a fully collaborative model of care in which the patient and healthcare team work together toward the patient’s health goals.5 It reflects an ongoing evolution in the philosophy of care: from care to patients (provider-centric model) to care for patients (patient-centric model) and finally to care with patients.
Learning health system: Defined as “a health system that continuously improves,” a learning health system builds improvement into its structure and operations.6 The framework rests on a strong foundation of collaboration, with research, care, social services, management, and patients coming together to eliminate silos.
“Quintuple aim” for healthcare improvement: This integrated framework from the Institute of Healthcare Improvement engages all stakeholders in a health system to achieve improvement across five dimensions: patient health and experience, health equity, health of service providers, population health, and system efficiency.7
Putting it all together: Synergistic approaches to creating and improving value
• Value creation
• Use of data to drive decisions
References
1. Porter M, Lee T. The strategy that will fix healthcare. Harvard Business Review. October 2013.
2. Teisberg E et al. Organizing health systems for high value. System Focus. August 2019.
3. PROMS background document. Canadian Institutes for Health Information. https://www.cihi.ca/sites/default/files/proms_background_may21_en-web_0.pdf
4. Defining value in “value-based healthcare.” Report of the expert panel on effective ways of investing in health. European Commission 2019.
5. Pomey MP et al. Le “Montreal model:” enjeux du partenariat relationnel entre patients et professionnels de la santé. Santé Publique S1:41-50.
6. What is a learning health system? Unité de soutien SSA Québec. https://youtu.be/apeiC6f7JLU
7. Nundy S et al. The Quintuple Aim for Health Care Improvement: A New Imperative to Advance Health Equity. JAMA 2022;327:521.