What’s wrong with Value based Healthcare?


What’s wrong with Value based Healthcare?

Author: Raine Vasanoja
Business Director, Nordic Healthcare Group


Value based Healthcare has been described as a silver bullet that will save healthcare. The idea is to design healthcare organisations and processes in a way that they are efficient and create value for the people in true need.


There is an intense Nordic debate on whether value based healthcare is good or not. I have noticed that there are misperceptions about what value based healthcare is, and what it is not. Now is a good time to straighten out these misperceptions. The challenge is not with the underlying principles of value based healthcare, but in how and where it is implemented.

It can’t be applied everywhere

Value based healthcare has been compared to methods such as total quality management, six sigma and lean management.  A common misperception is that value based healthcare is a method or a predefined system for reorganising healthcare. Here are my opinions about where it fits and where it does not. Value based healthcare is about optimising patient flows. Process or care path approaches seem to work when there are diseases and diagnoses that are predictable, such as for hip replacements and other orthopaedic treatments. For cronical diseases or complex diagnoses, like cancer, availability (i.e., service networks) and clinical competence are the value creating components.

Reimbursement should be aligned with the different types of healthcare; availability, competence and optimised care paths. There are already hybrid models in use based on bundled payments, quality, capitation and productivity. In order to arrange service networks to ensure availability, and to be effective the patient flows are increasingly important. That is why they need to be monitored in terms of quality and cost.

Resource consumption not to be forgotten

Value based healthcare has a lot of service design content. It involves design thinking as the patient is in focus and part of the process. When talking about value based healthcare, the emphasis has been on patient related outcome and quality indicators. Patient level resource consumption and cost must not be forgotten because managing capacity will be increasingly important when designing tomorrows healthcare systems. It is a necessity to monitor the patient level cost for several reasons:

  • To be able to design the care paths in a way that creates more value for the patients.
  • As a base for value based reimbursement such as bundled payments.
  • As a base for benchmarking and finding best practises on national levels.

The process of monitoring patient level cost and resource consumption can be complex and its information is often difficult to maintain. However, there are user friendly IT-solutions on the market. They use a methodology that has a solution to poor data quality, fragmented IT-systems and lack of system maintaining resources. The key is data, integration and transparency.

It’s all about data

It is obvious that it is difficult to measure outcome and patient level costs with poor data quality. National reporting standards, costing and quality measurement guidelines like in Norway or Sweden provide opportunities for benchmarking as registrations become increasingly important. There exist IT solutions that consolidate and match patient and healthcare data from different database environments.

Some healthcare managers believe that there are no solutions for monitoring the cost and outcomes for entire patient paths. I have good news though – there are good examples on solutions monitoring patient flows through whole service networks including social services, primary and specialist healthcare, psychiatry as well. There are also solutions for preventive analytics, where outcomes can be predicted and the healthcare planned and organised accordingly.

The data modelling is key here – the measurement and reporting model should be designed based upon what data is available. Good reporting and data storytelling will then create pressure to make better registrations. As a result the data quality will improve over time.


Applying value based healthcare in selected clinical areas, monitoring the patient level cost and outputs, and taking care of the data quality will result in a more adaptive healthcare system. Therefore, it is important that we use the same frame of reference when we debate and develop tomorrows healthcare system. In this way politicians will be able to make the right decisions and regulatory frames in a way that creates value. In the end, it’s all about patients.