By Timothy Wilson

The term Value-Based Healthcare (VBHC) was first made popular by authors Michael Porter and Elizabeth Teisberg in their ground-breaking work, Redefining Healthcare. In that book, which was published in 2006, the authors defined value as “the health outcomes achieved per dollar of cost compared to peers,” making clear that “financial results are an outcome, not the goal in and of itself.”

As a concept, VBHC is both uncontroversial and easy to comprehend, but as a practical remedy it gets complex fast. Isolated funding silos, cultural resistance, activity- and service-based payments, the lack of actionable data – among many other factors – make VBHC a difficult nut to crack. That said, the ideal place to start with VBHC initiatives, in Canada and elsewhere, is in the hospitals, as they’re touched by so many parts of the system, while also facing serious challenges.

“When looking at VBHC, hospitals represent the biggest opportunity, as they’re the biggest cost to the system,” says Dr. Jason Sutherland, Professor in the Centre for Health Services and Policy Research (CHSPR) in the UBC Faculty of Medicine. “At present, about 10 to 15 per cent of hospital beds are filled with patients who can’t be discharged due to lack of community support.”

In the above example, it’s easy to see how value – both in terms of health outcomes and cost – could be increased if a service were bundled to include short-term care at home.  In Ontario, this is exactly what’s happening at St. Joseph’s Healthcare Hamilton’s Integrated Comprehensive Care Demonstration Project (ICCP), which was the first in Ontario to pioneer a bundled care model.

“St. Joes is a good place to promote VBHC, because we’re a teaching hospital that also has a homecare business,” says Melissa Farrell, President at St. Joseph’s Healthcare Hamilton. “This way, we can create an integrated practice unit across the two organizations”.

Since 2015, St. Josephs Healthcare Hamilton has been joined by five other cross-provider teams in Ontario, all of which are piloting bundled models for patients who require short-term care at home after leaving hospital. This can apply to a range of clinical pathways, but is most easily implemented with scheduled events such as cardiac surgeries and hip and knee replacements. Having a care model that crosses organizations is a big step forward, with St. Joseph’s also having had success in chronic care, such as congestive heart failure and chronic obstructive pulmonary disease.

“It can look like you’re saving money when people are discharged without support, but those costs are just shifted into the community or return as a re-admission” says Farrell. “A bundled care model allows us to look beyond the walls of the hospital. That visibility is critical. From an integrated care perspective, the only way that VBHC works is with shared data – you need to track and monitor outcomes collectively”

This view is echoed by the Canadian Foundation for Healthcare Improvement (CFHI). In a report published last year, the CHFI noted the importance of identifying and measuring health outcomes for individuals and groups, and of tracking spending across full care pathways. The CFHI was clear that for VBHC to be realized, health care providers need to commit to deep engagement and collaboration, and to be ready to participate in a process that is both data and evidence-intensive. In that regard, Canada still has some work to do.

“Within the Ottawa Hospital, we have developed a data infrastructure, but in our current model in Canada, every hospital is its own entity,” says Dr. Alan Forster, Vice-President, Innovation, and Quality at The Ottawa Hospital. “As a result, access to data is a fundamental problem. We need to distribute our resources to deliver the best care, with a population perspective for all outcomes. Hospitals are ready to participate, because we carry a lot of risk, and are motivated to effect change.”

That change can come in many forms. Bundled payments, as in the Ontario example, are a popular component of VBHC, because they can be implemented in a limited way, without disrupting the larger system.  Value-based procurement initiatives for medical devices are also starting to take hold across the country, with organizations adopting purchasing practices that take into account the ongoing health of a patient, and the total cost to the system, as opposed to only addressing one-time hospital costs.

“In most cases, current procurement approaches and siloed funding models in Canada still treat medical technologies as commodities which has contributed to Canada being a poor adopter of high-value innovations,” says Brian Lewis, President and CEO of Medtech Canada. “Given the substantial patient benefits and savings to the broader health care system that many technologies can provide, we continue to strongly advocate for VBHC and are pleased that it’s making headway here since it can enable the shift to new models of care and provides opportunities for high-value technologies to be recognized and adopted.”

But without the right data, and unless the system is designed to respond to the right incentives, large-scale implementation of VBHC remains a challenge.

“In Canada, we don’t have good ways of attributing cost to interventions, hospitalization or medical concerns,” says Dr. Sutherland from UBC. “We know the price of new drugs, of a new technology or medical device, but overall – with some narrow exceptions – we’re not good at measuring costs.”

By necessity, that’s changing. Manitoba is moving forward with implementing a fully integrated value analysis program, which the province says will advance best practices through alignment with value-based procurement models. As with other provinces, Manitoba is reaching out to health care supply chain leaders, and procurement and value analysis specialists, to ensure that the right decisions get made, because at present tying procurement to outcomes remains comparatively rare.

“In Canada, we need better data on outcomes and on cost at the population level, with clear lines of communication, and visibility,” says Dr. Forster from The Ottawa Hospital. “I can’t think of a successful industry that spends as much as we do and doesn’t have robust measures of impact.”

There is an opportunity here to get creative, as in one innovative approach supported by Public Health Agency of Canada, the Heart and Stroke Foundation, and the MaRS Centre for Impact Investing, in which social impact bonds support a three-year community hypertension prevention initiative. Another example is New Brunswick’s Primary Health Care Integration Project, which embraces a risk/gain-sharing model to improve coordination and collaboration among services provided outside of hospitals.

“The amazing thing about bundled payment for integrated care, as well as risk/reward models, is that they create shared incentives for quality and remove the walls around providers” says Farrell. “People are now discussing how the entire continuum of care is paid for. They’re talking about the best way to structure payment and reward in order to deliver the best care in a cost effective manner. This has been difficult to do in the traditional siloed payment models”.

When looking at the examples across Canada, it is critical to note that VBHC is not acting as Trojan horse for private health care. Not only is VBHC not a threat to Canada’s public health system, it may be that the Canadian system offers some advantages that are unavailable elsewhere.

“One major benefit of the Canada Health Act, and the provincial and territorial delivery of healthcare, is that Canada delivers more equitable access to services, technology, and drugs, than do many other countries,” says Dr. Sutherland from UBC. “With VBHC, we could realize very substantial gains in effectiveness and value. Without changing how much we pay in taxes, we could still do much better.”

Central to Sutherland’s observation is the fact that, in a Canadian context, VBHC involves the ability to repeat success across jurisdictions. Though there are differences in how provinces deliver care, there is no reason that what works in one province can’t work in another. One challenge is that, though stakeholders in Canada are aware of the importance of VBHC, not many are taking a leadership role.

“When my colleagues and I attend conferences for the International Consortium of Health Outcomes Measurement [e.g. ICHOM], the Canadian presence is not substantial,” says David Barrett, Executive Director, Ivey International Centre for Health Innovation. “It’s clear that Europe is much further along in the VBHC movement, with countries like Sweden and the Netherlands taking the lead.”

That may not seem like good news for Canada, but it’s not as bad as it sounds. Canada, like most countries, remains on an emergent phase, despite the fact that, according to CHFI, seven in 10 Canadian health leaders claim their organization is acting on a commitment to VBHC. In truth, all nations struggle to measure and implement VBHC.

“We all agree we want better value in our healthcare system, but how do you measure health?” says Dr. Sutherland from UBC. “It’s a challenging question. We might want to assess someone’s overall functional status. That could include mental health or physical pain, which is often ignored.”

Since the publication of Redefining Healthcare, the book’s fundamental message has held strong, resulting in increased awareness of the legitimacy of VBHC around the world and leading to Canadian initiatives such as bundled payments and procuring for longer-term value. Change is afoot, and the digital transformation of the entire health care system will make it easier for us measure the larger value, and to re-think how we organize and pay for health services. Ultimately, that should help us attain the real goal: better health care for everyone.

Timothy Wilson is a research analyst and business/technology journalist with a special interest in healthcare.