Healthcare: Will We Reimburse Outcomes Instead of the Number of Services?

MedTech at swissnex 03|Value-based care is an emerging trend where patients and insurance providers pay for results.

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Medical treatments are generally reimbursed on a per-service basis, regardless of the outcome. In the US and the Netherlands, among other countries, an emerging approach called value-based care is being tested: reimbursement is based on patient health and efficient use of resources, rather than on units of care. For example, a major American insurance company implemented a value-based care approach by rewarding the patients’ outcomes instead of the sheer amount of administered treatments.

In Boston, swissnex and the startup four organized a panel of insurance and biotech experts to discuss this trend and its potential impact on Medtech, biotech and pharma companies.

Why is it important. Value-based care is a growing trend that should be monitored, says Alicia Evangelista, head of swissnex Boston Innovation+, who set the idea for a panel in motion. It is expected to lower healthcare costs, for example by avoiding duplication of care:

“If care providers are paid for their results and not for their efforts, this theoretically incentivizes more communication between them. Nowadays, if you see three specialists, you might get as many MRI scans while a single one could suffice.”

Panelist Lili Brillstein, CEO of BCollaborative, thinks that value-based care models will benefit patients by ensuring more coordinated, patient-focused care:

“Let’s imagine someone who is undergoing a surgery. In a value-based model, the focus is not just on the surgical procedure itself, but also on the prehab, such as labs, and radiology, as well as post-procedural care like physical therapy, care for possible infections, hospitalizations and follow-ups. Providers are accountable across this whole continuum, and not only for their own particular piece.”

A broad concept. There is no consensus on how to precisely define value-based care or how to put it into practice. But the concept hinges on two main ideas:

  • Reimbursements are based on outcome rather than the number of services: the objective is to avoid unnecessary treatments and to foster a more personalized care delivery to individual patients.
  • Novel software and hardware tools enable the shift: data analysis programs, electronic medical files and communication platforms help to assess treatment outcomes and follow-ups.

Many of the technologies required for value-based care are available today or are currently under development, says Antonija Burcul, CEO of four, based in Zurich and Boston, who moderated the panel at swissnex Boston:

“I like to compare the current phase of the value-based care transition to where cloud-computing was 10–15 years ago. In value-based care, the same way as in cloud computing, one size does not fit all: organizational needs of a healthcare entity, whether it is a government or a company, are unique. This transition is not about a single magic technology tool, but about finding the right set of tools for each organization.”

Is value-based care already a reality? It is currently being tested in the Netherlands, notably for patients suffering from chronic conditions such as heart diseases or cancer. Major experiments are also on their way in the US.

The implementation is challenging, due to the size and complexity of healthcare payers organizations, says Lili Brillstein:

“Payers’ systems are set up for fee for service reimbursement. For decades, they have conducted business based on those individual increments of care, and shifting focus takes time. It is why I advocate for models that do not immediately shift risk to providers and allow for partnership and consideration of the expertise for both payers and providers. This movement has begun, and will continue.”

What impact could it have on industries? Value-based care models will change the industry’s accountability, since it creates payment models where reimbursement is directly based on treatment efficacy, both clinically and financially.

Swiss Medtech and pharma companies should closely monitor and anticipate these changes, says Evangelista. “Our swissnex Boston event aimed at raising awareness among companies that might be impacted by this evolution.”

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