Chasing the holy grail of value-based healthcare

Patients, healthcare professionals, payers, and other stakeholders can have vastly different views on the value of a particular product, often resulting in a struggle between prioritising access to innovation and optimising costs. Addressing the ramifications associated with misaligned incentives in the fee-for-service payment model has been a driving force in the pursuit of value-based care.

The goal? Strike a balance – ensure patients can access medicines, maintain a sustainable healthcare system, and foster a robust pipeline of innovation that continuously improves treatment options. It’s a delicate dance, where pricing signals guide innovators on where to focus their R&D efforts, shaping the overall investment in healthcare and the expected value of future innovations.

Whereas the traditional fee-for-service model reimburses healthcare providers based solely on the volume of services delivered, value-based care is all about aligning prices with the value a new medicine brings to patients, healthcare systems, and society, compared to the current standard of care. This approach rewards innovation appropriately, prioritises access to the most valuable innovations, and aligns price signals with patient and citizen priorities, maximising the expected value of innovation for a given level of investment.

1900s

Dr Codman vs. the golden goose

While the term “value-based care” is relatively new, its spirit can be traced back to the early 1900s and the pioneering work of Ernest A Codman, widely known as the “father of outcome management”.

• Read the full article in pharmaphorum's Deep Dive digital magazine