Q&A: Getting value for money in healthcare

Q: What is value-based contracting?

A: Val­ue-based con­tract­ing is a type of pay­ment mod­el that ties the price of a drug and sup­port­ing patient ser­vices to spe­cif­ic health, eco­nom­ic or expe­ri­ence out­comes. What we’re try­ing to move towards is a mod­el that bet­ter aligns all stake­hold­ers’ objec­tives for the long term. With val­ue-based con­tract­ing, there should be a “triple win” so patients, health­care pay­ers and life sci­ence com­pa­nies ben­e­fit. At its sim­plest, if a drug and asso­ci­at­ed ser­vices deliv­er a pre-agreed out­come, an agreed price is paid; if the drug and ser­vice fails to deliv­er then health­care pay­ers do not reim­burse the cost.

Q: Why is this a hot topic now?

A: Pub­lic health sys­tems all over the world are under great pres­sure to deliv­er val­ue for mon­ey at a time when demand for care is grow­ing. The big ques­tion is how do we fund health­care over the next five to ten years? At the same time, the life sci­ences sec­tor is pro­duc­ing some amaz­ing sci­ence and com­ing for­ward with an extra­or­di­nary num­ber of new med­i­cines. The top ten life sci­ence com­pa­nies will deliv­er some­where between 350 to 400 new med­i­cines between now and 2026. These new drugs are like­ly to be more focused and more effec­tive. But they are also like­ly to require addi­tion­al funds. Val­ue-based con­tract­ing could be an attrac­tive option to assure appro­pri­ate out­comes are achieved. 

Q: What are the advantages of value-based contracting?

A: The triple win of val­ue-based con­tract­ing means every­one ben­e­fits. Patients get access to the best new drugs, health­care pay­ers get bet­ter val­ue for mon­ey and life sci­ences com­pa­nies are reim­bursed a fair price for the med­i­cines, which enables research and devel­op­ment to pro­duce the next gen­er­a­tion of drugs. Val­ue-based con­tract­ing also cre­ates greater trans­paren­cy using read­i­ly avail­able, but frag­ment­ed, data to help us under­stand what works best in terms of out­comes, as well as best val­ue for mon­ey. Ulti­mate­ly, val­ue-based con­tract­ing enables bet­ter col­lab­o­ra­tion between the stake­hold­ers for the long-term ben­e­fit of patients.

Q: What are the barriers to value-based contracting?

A: Val­ue-based con­tract­ing rep­re­sents a big change over the way we have worked for so long and it takes time for the many stake­hold­ers involved to under­stand the impact and make the nec­es­sary adjust­ment. Most peo­ple in health­care agree val­ue-based con­tract­ing is the right step in prin­ci­ple. But they are look­ing for the evi­dence that it is prac­ti­cal. The life sci­ences indus­try wants to be sure they are still going to get a fair price for their med­i­cines. Pay­ers want to be sure it will lead to bet­ter val­ue for mon­ey. Patients need to be reas­sured it will improve access to drugs, par­tic­u­lar­ly those cur­rent­ly con­sid­ered too expen­sive. So these stake­hold­ers are look­ing for proof points. Inevitably, process­es, mind­sets and rela­tion­ships need to change. One of the inter­est­ing prac­ti­cal chal­lenges is agree­ing what spe­cif­ic out­comes we are going to mea­sure to deter­mine whether “val­ue” has been achieved and how we are going to mea­sure it. We have clin­i­cal out­comes from tri­als, but oth­er mea­sures are less well under­stood, such as the eco­nom­ic impact of, say, enabling some­one to return to work or to remain in their own home for longer. Then there is qual­i­ty of life: how do you mea­sure the val­ue to some­one of liv­ing with less pain or of a good night’s sleep? It is pret­ty com­plex.

Q: Does the NHS have systems in place for the adoption of value-based contracting?

A: Gen­er­al­ly, pub­lic health sys­tems such as the NHS do have good qual­i­ty data. The issue is that it is frag­ment­ed and in many dif­fer­ent for­mats. In the UK, we have clin­i­cal data from the NHS and also some data from NHS admin­is­tra­tors on eco­nom­ic cost and patient through­put. But val­ue-based con­tract­ing also needs to har­ness data from many oth­er sources, includ­ing social care and local author­i­ties. Employ­ers will have infor­ma­tion about patients return­ing to work. Oth­er data will come from wear­able devices or patient apps. Data is there and we can always cre­ate data if there are gaps. But there needs to be the con­fi­dence and trust to share data appro­pri­ate­ly, espe­cial­ly in health­care.

Q: What is the role of the patient in data collection?

A: It is impor­tant to address any con­cerns patients have around the con­fi­den­tial­i­ty of their med­ical records. The data that under­pins val­ue-based con­tract­ing can always be anonymised. Per­son­alised, tar­get­ed med­i­cine and treat­ment needs will require patient data to suc­ceed; the more data we have, the bet­ter the under­stand­ing of out­comes. One of the rea­sons why coro­n­avirus is being resolved rel­a­tive­ly quick­ly is because so much data has been shared, not just in the UK, but across the world. This has led to the devel­op­ment of vac­cines, but also to improve­ments in the way we care for COVID-19 patients in hos­pi­tal. I’m excit­ed EY has man­aged to cre­ate the Health Out­comes Plat­form, a nov­el secure dig­i­tal solu­tion that brings health­care stake­hold­ers togeth­er seam­less­ly and encour­ages col­lab­o­ra­tion. 

Q: Will value-based contracting transform care?

A: I am very excit­ed about the poten­tial for val­ue-based con­tract­ing to help deliv­er sig­nif­i­cant improve­ments in out­comes for patients, while achiev­ing bet­ter val­ue for mon­ey for pub­licly fund­ed health sys­tems such as the NHS. There is much work to be done, to build trust among all stake­hold­ers and to put in place agile sys­tems that respond to chang­ing infor­ma­tion and require­ments. But we are mov­ing in the right direc­tion.

For more infor­ma­tion please email dmathews1@uk.ey.com

Pro­mot­ed by EY