**1. Introduction**

Value-based healthcare (VBHC) is a term coined by Harvard Professor Michael Porter. Along with Elizabeth Teisberg, he published his book in 2006 entitled *Redefining Health Care Creating Value-Based Competition on Results* [1]*.* They proposed that healthcare should be restructured and focused on competition and improved outcomes for patients.

Some level of competition is important to drive improvement forward. In other fields of expertise, competition is what drives knowledge forward and thus improve value to its consumers, such as in technology. In health, this competition also occurs today but is dysfunctional and does not equate to value to the patient.

Value is defined, according to Dr. Porter, around the costumer and that is achieving the best outcome at the lowest cost, in other words better health per dollar spent. Conrad defines health as maximum health benefit at minimum cost [2]. The shift from today's model and the value-based model is a change that must be physician led and focused around three principles: 1—the goal is value, 2—medical practice should be organized around medical conditions and care cycle, and 3 results must be measured [3].

Moving to a value-based structure is challenging but feasible and the best way to contain costs is to improve outcomes [4], but containing costs alone will not solve the problem. The focus on value is key to a sustainable health-care system [5]. Achieving and maintaining good health is less costly than dealing with poor health, according to Dr. Porter [4].

Not only physicians but the industry itself is moving toward a value-based system. For example, in orthopedics, we have value-based implants [6]. To cut costs of sterilization and sales representatives, they are manufacturing single-use kits.

There are some barriers to the use of these implants such as the surgeon's conflict of interest with the industry [6], but they can be overcome.

Right now, we have a fee-for-service model for reimbursement that over the past several years is shifting toward this value-based model that attempts to link quality and value to payment [7]. The difficulty in implementing it is to quantify quality and value. Professional societies are trying to develop different programs to attempt to define what high value is.

Tools that quantify if we are achieving our goals are needed. In VBHC, we need quality measures that quantify health-care processes, outcomes, patient's experiences, and organizational systems to evaluate the effectiveness of delivered care as it benefits the patient [8]. Value and good outcome may differ from person to person and from condition to condition. It is hard to build a single tool that can be used for every condition.

But how does this model fit in the real world and how can we make the transition to this value-based model keeping in mind we need to improve value to patients? That's what we are trying to answer in this chapter. It is a rather simple question but with a complex answer. A few hospitals in the United States and around the world are adhering to this type of healthcare based on value to the patient [9]. We are going to review a few of them and how they implemented it.

Value-based healthcare may be considered a merge between evidence-based medicine, patient-centered care, and cost-effectiveness [10], even though in essence they are not the same thing.

#### **2. The goal is value for patients**

Today's healthcare is not necessarily structured that way. Hospitals want to increase revenue, health plans want to cut costs, and physicians want to increase revenue to their practices. Those practices not necessarily mean better outcome or results for the patient. Patients only want good outcomes with less office visits, less procedures, and less tests [3]. A more individualized practice is needed to meet all these goals.

Many argue that genetic testing is a possibility in the near future [11], but that raises many other questions. The majority of physicians are not trained to interpret the results of a genetic test and that may lead to wrong interpretations and harmful treatments. When that is done correctly, by a specialist, that raises the concern that sometimes an asymptomatic patient or one that did not developed the disease, whether they need treatment or not.

The concept of value remains misunderstood. It is not supposed to be confused with cost reduction, although it encompasses it. Value should be defined around the patient and what they see as a good result, and the creation of value should be rewarded. Value depends on results not volume of services, and the two should not be confused [12].

The cost related to value is the total cost of care cycle, not only the cost of a single procedure or surgery as it is today. Often we need to spend more money in some services to reduce the need for others, which in the end will reduce the total cost of care. The outcome is condition specific, and no single outcome captures the results of care [12].

This value-based model strengthens the role of primary care. There are four features of primary care as stated by Starfield in his 2005 paper: 1—first-contact access, 2—long-term person-focused care, 3—comprehensive care for most health needs, and 4—coordinated care [13]. In primary care, value should be defined for similar groups with similar needs. Primary care and preventive medicine should be

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*Value-Based Healthcare*

*DOI: http://dx.doi.org/10.5772/intechopen.93378*

(ICHOM), as we will see next.

**and care cycle**

them further along the text.

across locations.

for patients [15].

[12]. This will be addressed further along the text.

elimination of others, and better use of the local capacity.

divided by need, for example, healthy children, single chronic disease, and so on

The structure we have today makes it difficult to measure value, and most providers fail to do so. Some argue that measurement is necessary but not sufficient to improve quality. One of the barriers to improve quality and value to the patient is the lack of a uniform, simple, and reliable measurement. This difficulty is being addressed by The International Consortium for Health Outcomes Measurement

Outcomes must be reported publicly to benefit patients and providers. These public reports will further accelerate innovation by motivating their peers to improve their own results. The costs for achieving value to the patient must be measured around the patient, not specialty or around departments. Measuring cost around an entire cycle of care will reduce costs through reallocation of servicer,

The change in the reimbursement model from a volume-based to a value-based model will allow a reform in payment. It will reward value by providing bundled payment covering the full cycle of care, covering periods of months to 1 year, or longer, according to the condition treated. We will cover this topic further along. The payment must fit five conditions: payment covers the overall care required to treat the condition, payment is contingent on delivering good outcomes, payment is adjusted for risk, payment provides a fair profit for effective and efficient care, and providers are not responsible for unrelated care or catastrophic cases [14].

**3. Medical practice should be organized around medical conditions** 

The organization we have today is by specialty, so a patient who has a condition that needs the effort of different specialties will bounce around from office to office to get his treatment. The reform should be made that patients only go to one place and have a team ready to address their different problems related to the initial condition in the same visit. Organizing around medical conditions and care cycle will be a major change for physicians but a great improvement for patients [3]. Effective care should be centered around a medical condition. That will need the effort of multiple physicians and other health professionals. This organization is known as integrated practice unit (IPU). The IPU is formed by physicians and nonphysicians who provide the full cycle of care for the patient. We will review

The scope of services should be accounted for concentrating volume in fewer locations, choosing the right location for each service line, and integrating care

Defining the scope of service is to reduce or eliminate service lines where value cannot be achieved. Another possibility is to create partnerships or affiliations with services that you have eliminated because of the lack of possibility of creating value

The concentration of volume in fewer locations is to create a consumer-oriented healthcare. Volume matters for value. The more you treat a disease and the more you learn, the better your treatment will be and more value will be created for the

To choose the right location for each service line is of high value for patients. Less complex conditions should be moved away from high-value facilities to lowcost facilities. It's important to match complexity and the skills needed to the right

patient. This can be very difficult for organizations to achieve [15].

location. That will optimize cost and productivity [15].

#### *Value-Based Healthcare DOI: http://dx.doi.org/10.5772/intechopen.93378*

divided by need, for example, healthy children, single chronic disease, and so on [12]. This will be addressed further along the text.

The structure we have today makes it difficult to measure value, and most providers fail to do so. Some argue that measurement is necessary but not sufficient to improve quality. One of the barriers to improve quality and value to the patient is the lack of a uniform, simple, and reliable measurement. This difficulty is being addressed by The International Consortium for Health Outcomes Measurement (ICHOM), as we will see next.

Outcomes must be reported publicly to benefit patients and providers. These public reports will further accelerate innovation by motivating their peers to improve their own results. The costs for achieving value to the patient must be measured around the patient, not specialty or around departments. Measuring cost around an entire cycle of care will reduce costs through reallocation of servicer, elimination of others, and better use of the local capacity.

The change in the reimbursement model from a volume-based to a value-based model will allow a reform in payment. It will reward value by providing bundled payment covering the full cycle of care, covering periods of months to 1 year, or longer, according to the condition treated. We will cover this topic further along.

The payment must fit five conditions: payment covers the overall care required to treat the condition, payment is contingent on delivering good outcomes, payment is adjusted for risk, payment provides a fair profit for effective and efficient care, and providers are not responsible for unrelated care or catastrophic cases [14].
