Seizing the Moment for Transforming Healthcare Spending Models

A new report released by the World Economic Forum ahead of its annual meeting this month, emphasizes the need to expand the adoption of value-based healthcare (VBHC) payment models.

Using case studies illustrating success stories, challenges and barriers, and potential solutions, the report aims to guide stakeholders toward a shared understanding of the value-based payment model. The report, entitled The Moment of Truth for Healthcare Spending: How Payment Models Can Transform Healthcare Systems, arose from the work of the WEF’s Global Coalition for Value in Healthcare, a community of experts from various sectors.

Why Shift to a Value-Based Model?

The traditional fee-for-service and DRG-based payment models in use today are unsustainable: they are inefficient, lack accountability for outcomes, and frustrate health equity and innovation. According to the report, an estimated 20% to 40% of healthcare spending is wasted.

By contrast, VBHC payment models reward stakeholders that positively contribute to meaningful patient outcomes. These models also:

  • Emphasize quality care over volume
  • Reduce wasteful and/or ineffective interventions
  • Provide integrated care
  • Better address equity in health outcomes
  • Reduce workforce burnout

The transition from volume-based to VBHC payment models requires:

  • Investment in new data and IT systems
  • New business models around care delivery
  • Acceptance of longer-term time horizons

Putting VBHC Models in Practice Worldwide

VBHC models may fall into one of the following categories:

  • Activity-based, linked to predetermined quality and value metrics or other outcomes
  • Bundled payments: Usually used for the management of specific conditions
  • Capitated payments: More likely used for general health issues

To accelerate the pace of VBHC change, the WEF launched the Global Innovation Hub. This initiative brings together examples of successful implementation of VBHC to share their experiences and lessons learned.

The report summarizes over 30 brief case studies from around the world, ranging from including VBHC in US medical school curricula to maternal healthcare initiatives in sub-Saharan Africa, to diabetes care in Saudi Arabia and the Netherlands.

Sharing experiences of what does and does not work is necessary for scaling up these models across geographies and patient groups. Collaboration and partnerships are vital to creating an agreed-upon model that can be translated into larger systems.

Other VBHC Resources

Read more about the United Nations Institute for Training and Research Value-based Healthcare Hub here.

The US Centers for Medicare & Medicaid Services (CMS) provides several authorized value-based programs and activities. Learn more about them here. A recent opinion piece suggests that although many CMS pilot programs have underperformed, it can learn from their experience to devise more efficient care models.

Read about the role of data science and the value agenda in the VBHC framework here.

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