Internationally healthcare has operated by similar rules, whether this is through state purchase / provision (such as the NHS), private insurance or more hybrid systems.
Typically, there is ‘a payer’ and ‘a provider’. Even in insurance-based systems, where the payer could be a private entity, there is a cost to the state, either through tax-deductions or some type of payment for uninsured or ‘uninsurable’ people, such as Medicaid or Medicare. The result is that healthcare providers have ended up in cycles of ever-increasing activity, requiring increasing funding. Whilst ‘Payers’ may put in place some control-type initiatives around only funding certain procedures or gateways, there has been a separation of accountability between provision of care and that of funding it.
As activity ramps up, the cost to payers and of course the state increases. Continuous increases as a percentage of GDP cannot be sustainable forever, even though there is obviously much political debate about what the suitable amount is.
Nonetheless, there is lots of evidence that increasing activity does not necessarily result in an increase in quality or indeed lead to better outcomes and any spending must be justified and value for money.
The question, therefore, is ‘how can incentives drive better quality of care rather than just quantity, as well as driving the right type of provision?’ The answer is VBH, where the focus is on populations and outcomes.
The basis of VBH is that healthcare activity is driven by the illness of a population and kept under control by the wellness of a population. If contracting for healthcare is based on achieving good outcomes for a population, then the incentives effectively push systems towards keeping people as well as possible, as they are managing the risk associated with people becoming unwell. We can discuss outcomes in another blog, but essentially an outcomes-based contract could take the form a set agreed amount of money to care for a population with a potential risk-share agreement related to achieving specific outcomes or relating in part to activity.
This approach has to be data-informed. Payers and providers really need a robust understanding of the inherent risk and priority areas affecting the populations. The first step is really understanding what is meant by population.
Theoretically, a population could be defined just by a geographic area, however there are a number of issues with this. First the needs of members of that area will vary widely and it will be very difficult to define specific interventions to improve outcomes. It is also the case that confining to a geographic area could mean that socio-economic status could have a bigger impact than it should. For example, there may be over activity in affluent areas and unmet need in more deprived areas. A focus on outcomes should seek to address inequalities.
Another way of defining populations may be by disease or condition. Although this may focus on good medicalcare, there is a risk that this results in an over-medicalised approach when it is known that social determinants are paramount.
Some examples of population segmentation models can break down populations in different ways to understand risk, cost and wellness. Example include ‘Bridges to health’ (https://outcomesbasedhealthcare.com/bridges-to-health-segmentation-model/) , but others are in use. Other blogs will look at approaches to Population segmentation and understanding risk.
VBH contracts based on Outcomes support a wider medico-social model of provision that by its nature can be more personalised, preventative and proactive. It necessitates good primary care, as most of this work will take place in community facilities or peoples own homes and requires medical optimisation of chronic disease along with bringing in support wrapping around a person’s social set up, especially in the case of Frailty or End of life.
Its widely becoming accepted that VBH is the way forward, but there are advantages and disadvantages from all perspectives.
For payers, the news is generally good – It allows them to apply a capitated fixed budget rather than being an open chequebook. The quality of information will affect the risk share elements and another challenge may be convincing providers to accept the risk associated with this type of contract. In areas where there are lots of providers, then it may be easier, but in systems where the number of providers is limited, payers will have to consider market stability and provider readiness with more caution.
For providers, there is obviously a benefit of knowing their likely income and potential extra income should they meet agreed criteria. This allows a degree of financial stability without the need to drive up activity. As it is a new area, there may be difficulty in understanding what the right ‘price’ is and if there are multiple payers on different contract types, there could be increased complexity.
The other difficulty is that although some providers may hold the risk around activity, they may not have the levers to manage the risk. In the case of a big hospital, the type of interventions required to manage the risk may need to be delivered through primary care providers. This may be easier for vertically integrated systems, but may need new commercial relationships for others. An example where this has been successful is in Staten Island (https://statenislandpps.org), but the key here has to be robust understanding around investment and benefits realisation of community projects. Some thoughts around this will be shared in a future blog.
Finally, for people (or patients) there is the opportunity that the care and support they will receive is of greater value for them. By necessity, it should be better coordinated and personalised, leading to a better experience. In systems where patients pay or co-pay, the cost of care could be reduced. For some, though, it may feel uncomfortable, when previously they received very medico-centric care and under VBH it may be delivered through wider disciplinary teams focussing on different interventions. It might also be the case that some people might expect certain activity, which is not seen as adding value. An example may be that a radiological investigation is not seen as offering value in a care pathway, so is no longer offered. In the long run, people would benefit from better outcomes, but there may be challenges in managing expectations.