1. Value-based health care


The Medical Devices area is one of the most innovative and growing sectors of scientific and technical advancement. The following lesson, while particularly important for this course also applies to other medical technologies.

Value-based health care  

Many international organisations like the European Union (EU), the World Health Organisation (WHO) and the Organisation for Economic Co-operation and Development (OECD) have described the need for change in health systems, redefining of what value in health care is.

The OECD has defined 4 overarching requirements for this change [1]:

  • We need to better reward performance, not quantity and low value.
  • We need to develop better data and use real world evidence to reward value.
  • We need to develop better collaboration. 
  • We need to incorporate the views of patients.

This new approach to healthcare delivery is widely known as 'Value-Based Healthcare' (VBH). 

There is no single definition of 'value' in VBH. One model, developed by American economist Michael E. Porter, has a clear economic approach, where “value” is derived from measuring health outcomes that matter to patients against the cost of delivering the outcomes [2] [3]. 

In this value ratio, the numerator (outcomes) represents condition-specific results that matter most to patients, such as functional recovery and quality of life, while the denominator (cost) applies to the total spending for the full cycle of care. This model is widely being used across both private and public health systems.

Value-based healthcare based on the economic approach is a healthcare model in which hospitals and health care professionals are paid based on patient health outcomes. VBH differs from a fee-for-service or tax-based system, in which providers are paid based on the amount of healthcare services they deliver. The transition from fee-for-service to fee-for-value has been embraced as the best method for lowering healthcare costs while increasing health outcomes, quality of services and helping people live healthier lives [4].

In the EU the definition of 'value' has been described by an independent Expert Panel in a broader context that follows the Charter of Fundamental Rights of the European Union [5]. This broader application does not change the fundamental economic approach but seeks also to include the overarching purpose and obligations of health systems in Europe beyond cost-effectiveness. The European Commission Expert Panel has defined value in four pillars, Figure 1:

  • Allocative value: Equitable distribution of resources across all patient groups.
  • Technical value: Achievement of the best possible outcomes with the available resources.
  • Personal value: Appropriate care to achieve patients’ personal goals.
  • Societal value: Contribution of healthcare to social participation and connectedness.

Figure 1: Defining value. EC Expert Panel 2019.[6]

The European Alliance for Value in Health has set out six principles for working with value in health [7] that build on the four pillars above. These principles are applicable across health systems, services, products and communication, and should direct any innovation:

  • Outcomes that matter to people and patients, as well as benefits valued by health systems and societies, are at the centre of decision-making.
  • Interventions and services addressing prevention, social care and healthcare are organized in an integrated way around people and patients.
  • Resources are allocated towards high value care and prevention, with outcomes and costs of care measured holistically.
  • Continuous learning, education and healthcare improvement is based on evidence, and supported by data and insights.
  • Innovative ways of care delivery are fostered.
  • Financing models and payments reward value and outcomes.

The Figure 2 below shows the expected benefits in a VBH system for different stakeholders.

Figure 2: Value-based health care benefits. NEJM Catalyst, Massachusetts Medical Society. 2017. [8] 

[1] OECD. Value-based health care in Europe Collaborating for a healthy future. PowerPoint Presentation (oecd.org) Source: 
[2]. Porter ME, Teisberg EO. Redefining Health Care: Creating Value-Based Competition on Results. 2006 Boston, MA: Harvard Business School Press. 
[3] Porter M., What is value in health care? N Engl J Med, 2010. 363(26): p. 2477-81
[4] EIT. Implementing value-based health care in Europe - Handbook for pioneersSource: 
[5] European Commission, Expert Panel (2019). Defining value in 'value-based healthcare'. https://ec.europa.eu/health/sites/default/files/expert_panel/docs/2019_defining-value-vbhc_factsheet_en.pdf

[6] European Commission, Expert Panel (2019). Defining value in 'value-based healthcare'. https://ec.europa.eu/health/sites/default/files/expert_panel/docs/2019_defining-value-vbhc_factsheet_en.pdf

[7] European Alliance of Value in health. Our principles. https://www.europeanallianceforvalueinhealth.eu/value-based-health-systems/our-principles/
[8] NEJM Catalyst. What Is Value-Based Healthcare? Massachusetts Medical Society. 2017. https://catalyst.nejm.org/doi/full/10.1056/CAT.17.0558