Value-based approach offers South African healthcare a way towards the light.

For NHI to be a success, government needs to consider incentivising doctors to achieve better health outcomes for patients – either by preventing illness or by treating it as quickly and cost-effectively as possible – rather than just paying them for providing a service.

Value-based healthcare could revolutionise South Africa’s health care system by making it both cheaper and quality-focussed, said Diana Verrilli, vice president of Payer and Revenue Cycle Services at the US-based McKesson Specialty Health.

SA’s public healthcare system is often seen as weak, generally over-stretched and poorly resourced. On the other hand, while the private healthcare system is regarded as efficient, it is often criticised for being too expensive and beyond the reach of many. The government contributes just more than 40% of all expenditure on health, yet the public health sector is under pressure to cater for about 80% of the population.

But regardless of the size of the population, everybody should have access to quality health care, and value-based care can be seen as a framework that makes sure that this happens, said Verilli.

Speaking at a conference on Value-Based Care in Oncology organised by the Independent Clinical Oncology Network (ICON) in March, Verilli said that evidence is mounting in support of a shift from fee-for-service to value-based health care which could improve the patient experience of care (including quality and satisfaction), result in a healthier population, and reduce the per capita cost of healthcare. Her work in the US with McKesson, a shareholder of the US Oncology Network, has been at the forefront of assisting healthcare providers to deliver better care at lower costs by encouraging a focus on providing the right care at the most appropriate cost.

“The model is turning traditional thinking – that says in order to improve health outcomes we have to spend more – on its head,” commented Dr Ernst Marais, COO of ICON, a doctor driven network of South African oncology professionals that is championing a shift to value-based care in the country. “With a value-based approach it is actually possible to reduce costs and improve outcomes simply by focusing on different things and – importantly – taking the entire care continuum into consideration.”

Patient centricity is key to the success of the model which means that patient support needs to be individualised.

Value-based care has been adopted in several countries, with the US leading the way. The focus is on efficient spending to get outcomes that matter to patients – notably their quality of life and health. Providers are incentivised to achieve better health outcomes for patients – either by preventing illness or by treating it as quickly and cost-effectively as possible, generating fewer emergency room visits and hospitalisations. And although the move to value-based healthcare is happening slowly, payers are increasingly basing reimbursements on the quality of care provided, not just the number and type of procedures.

“The principle of value-based care is that you are paid for where you add the most value, and insurance companies and third party payers are willing to pay more for measured outcomes,” says Dr Marais. “A shift to this kind of reimbursement has been shown to deliver benefits to all stakeholders in the sector including and most importantly – patients.”

Writing in the Harvard Business Review last year, Laura Kaiser and Dr Thomas Lee, state that the shift from volume-based to value-based health care is inevitable. Under this approach, innovative providers aim to compete for and attract more customers with lower prices and higher-quality care and services. As value-based payments gradually replace the fee-for-service model, providers that have not adapted will be left behind.

However, the biggest impediment to change invariably is the shift from fee-for-service to value-based reimbursement because performing and billing less services may be perceived to erode the short-term revenue of providers.

“Because most providers’ business models still depend on fee-for-service revenues, reducing volume (and increasing value) cuts into short-term profits,” explained Dr Marais. However, Kaiser and Dr Lee argue that there is a compelling business case for acting now to achieve value-based care without worrying about when the market will make the shift. Provider organisations that are leading the way, they say, will gain expertise in managing the risk of caring for a population under a prepaid budget. And those that start sooner will be better positioned for success.

Verrilli agreed, and added: “Payers now emphasise that physicians should come up with treatment recommendations that are in the best interest of the patient and rightly so”.

“I think what’s important is having standards of care and making sure that every patient has equal access. And such programmes [Value-Based Care] give physicians incentives to provide that value and standard of care at the appropriate level,” she said.

Marais said with the rising cost of healthcare it will be imperative to find ways to make medical funds go further, especially for when SA transitions to a National Health Insurance (NHI) plan.

The government has been pushing for the introduction of NHI, which it sees as the panacea to SA’s underperforming public healthcare system.

With NHI, the government is seeking to improve the health system, with an emphasis on public health, as well as refining the functionality and management of the system through stringent budget and expenditure monitoring. It will improve quality in the public sector and it will seek to reduce costs in the private sector – the ultimate solution for achieving universal healthcare in SA. However, there are question marks around the affordability of the plan. Inability to cover practice expenses under NHI could force providers to shut up shop.

Verrilli said the NHI scheme is necessary, but emphasised that government should also seriously consider the principle of value-based healthcare.

“From an NHI perspective you have to have minimum benefits that everybody gets …they should not differentiate based on your ability to pay,” said Verrilli.

Value-based care means that physicians now must care about what happens to patients prior to arriving in their office, and also about what happens to the patients when they leave that office. The goal always should be to advance better care, smarter spending and a healthier population, said Verrilli.