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Creating Impact: What is Value-Based Healthcare?

26th July 2022

Value-based care represents a constant drive to deliver outcomes that truly matter to patients.

In the first of EIT Health Ireland-UK’s ‘Creating Impact’ series, we deep dive into the concept of ‘value-based healthcare.’ This article sets out examples of how patient-centricity can work in practice as Europe looks for new models to deliver healthcare in a post-pandemic world.

What is value-based healthcare?

In their book Redefining Health Care, Michael Porter and Elizabeth Teisberg introduced the idea of value-based healthcare. They define value in healthcare as outcomes that matter to patients divided by the cost to achieve these outcomes. This concept introduces a value ratio. The numerator (outcomes) designates condition-specific results that matter most to patients, such as functional recovery and quality of life. The denominator (cost) applies to the total spending for the full cycle of care. Accordingly, if outcomes that matter to patients are not improved, the resulting value is low[1].

The term ‘value-based healthcare’ has come to be used for the restructuring of healthcare delivery towards measurable outcomes that have high impact and matter most to patients.

Why is value-based healthcare important?

Performance metrics in health tend to focus principally on inputs and outputs. Metrics based on outcomes such as life expectancy are important, however it can be difficult to find metrics set on outcomes that patients truly value, such as pain, functionality and quality of life [1].

For example, Sweden is known to have some of the best orthopaedic clinics globally yet patients who undergo total hip replacements experience a vast range of outcomes. Those treated at the lowest-performing hospitals require follow up surgery within two years at rates that are six times higher than patients treated in the top ranked hospitals[2].

Simply put, value-based healthcare aims to drive care systems towards enhanced patient outcomes at lower costs. It applies to the entire spectrum of healthcare, be it primary, secondary or tertiary care. These values embody the humane element of healthcare relying on fundamental beliefs like ethical practices, compassion, and safety.

How can value-based healthcare be implemented in practice?

Healthcare pioneers such as NHS Wales  have already begun to apply outcome measurement to defining value and making investment decisions. Based on patient reports, NHS Wales found that 19% of cataract surgeries do not improve visual disability. In 2017, a teams at NHS Wales developed a portal for standardised patient-reported outcome measures (PROM) collection for 31 care pathways, with questionnaires available in English and validated Welsh translations. This is now strategically used by the NHS and clinicians in triage to determine the optimal care pathway for each patient [3].

Advocating for value-based healthcare

EIT Health’s High Value Care Forum has been established with the aim of setting standards to measure the right outcomes and incentivising the healthcare industry to pay for outcomes rather than services. For more information on the work the EIT Health Think Tank is doing to promote value-based healthcare, check out our latest reports, for example ‘Implementing Value-Based Healthcare in Europe: A handbook for pioneers.

If you are an innovator in healthcare, why not take time to learn about the theory and implementation of value-based healthcare. EIT Health’s academy platform has an in-depth course on various aspects of High Value Care, sign up today.

Stay tuned for the next instalment in our ‘Creating Impact’ series which will look at reimbursement models taking shape across Europe for digital health apps.

  1. EIT Health, Implementing Value-Based Health Care in Europe: Handbook for Pioneers (Director: Gregory Katz), 2020. Available at: https://eithealth.eu/wp-content/uploads/2020/06/Implementing-Value-Based-Healthcare-In-Europe.pdf

  2. Kärrholm J., et. Al., 2021. Swedish Hip Arthroplasty Register Annual report 2019. 10.18158/H1BdmrOWu. Available at: https://www.researchgate.net/publication/349426568_Swedish_Hip_Arthroplasty_Register_Annual_report_2019 Accessed on: 24-07-2022

  3. EIT Health, Health system NHS Wales, Available at:

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