Value Based Healthcare (VBHC) from Michael Porter; oplossing of illusion?

Healthcare is fragmented, the quality of care is often far from optimal and costs continue to rise by double digits. Value Based Healthcare (VBHC) from Michael Porter and Elizabeth Teisberg is seen by many as the solution to these problems.

But is this really the case? In this blog, we show that VBHC will only lead to even more poor coordination of care. If this model is implemented across the board, people with complex care needs such as multimorbid patients and vulnerable elderly people will be the big losers. Groups that are growing in our country. But fortunately, there is an alternative based on an integrated care approach, with incentives for cooperation between professionals to provide the right care in the right place, supported by state-of-the-art information technology..

Wat is VBHC?

In simple terms, VBHC is about achieving the best possible outcome for the patient at the lowest possible healthcare costs. In VBHC, a disease-specific care pathway for the treatment of a patient is the starting point. The entire process from prevention to rehabilitation/aftercare with all involved disciplines is mapped out. Data is collected and analysed, after which optimisation of the care process takes place. In fact, VBHC advocates a chain care approach that allows the consumer to choose the best provider on the basis of objective quality criteria.

To apply VBHC in practice, Porter and Teisberg developed an implementation model consisting of six interrelated building blocks, as shown in Figure 1 below.

Figure 1: VBHC implementation model


Wonderful, you might say, but unfortunately there are some nasty snags.

VBHC: the pitfalls

On a number of points, the VBHC model looks much better than it actually is. We list the pitfalls:

1.VBHC is (even) more market forces

VBHC is explicitly based on a competition model between healthcare providers on the basis of healthcare outcomes. And that on the level of diagnosis and treatment of individual diseases. If you implement VBHC in detail, you get a situation of full market forces. You create competition between individual providers on the level of diseases. This stimulates healthcare providers to specialise extensively. We only have to look at the US, where market forces and far-reaching specialisation lead to enormous inequality, to realise that we should not want this. An Anglo-Saxon model of full market forces, in which healthcare is regulated by supply and demand, does not fit with our Rhineland culture and is not compatible with the soft side, which is what healthcare is all about. Complex and vulnerable patient groups in particular will be adversely affected by this. Not least because the legal and financial frameworks for an integrated approach are lacking. To achieve better health outcomes at lower costs for these groups, the entire network of prevention, care and welfare must be included and healthcare providers and health insurers must work together. This is currently not the case in the Netherlands because the legal and financial frameworks for this are lacking.

2. VBHC is chain care

VBHC assumes a well-functioning chain care and chain financing. However, in the Netherlands we have only half implemented chain-based care and we forgot to include the second line in the chain-based care financing of the GP. Is that a bad thing? Yes, because it means we are not achieving the desired results in terms of quality improvement and cost saving. In the Netherlands, where integrated care is applied, we see rising costs and only a minimal improvement in a number of quality indicators. In contrast, countries such as England, Germany and New Zealand have shown clear, positive effects. There is a simple explanation for this: in these countries, health insurers conclude chain contracts with both primary and secondary care providers who work together in a single organisational network. In these organisational networks, they have joint quality frameworks and guidelines. This cooperation is essential, especially for patients with complex care needs..

3. VBHC is more own risk

In contrast to the full-blown market forces that characterise VBHC, there is a public approach to healthcare that is based on a population-based approach. Regardless of your background and income, you as a patient receive the care you need. The regulated market system, as we know it in the Netherlands, is based on a hybrid model of market forces on the one hand and public (government-controlled) healthcare on the other. Implementing VBHC, as Michael Porter proposes, leads to pure (disease-specific) market forces, which irrevocably results in more excess risk for patients. After all, value is determined on the basis of the best-presenting provider, on which the price for the patient is subsequently based. However, international research shows that this approach leads to unequal opportunities for good care. The American situation, in other words. Healthcare systems based on a public approach are better able to guarantee equal access to care regardless of background and income.

4. VBHC presupposes a patient who chooses rationally

VBHC assumes that patients are able and willing to make rational, financially responsible choices based on objective information about quality and price; the supermarket model. However, research shows the opposite. It turns out that people often do not make rational decisions when it comes to their own health. They opt for well-regulated care close to home and attach less value to the quality and cost of that care. In addition, people are often not fully informed or have access to all quality aspects and costs of care. People find it difficult to assess the value of the available information. Health (care) is unfortunately more complex than a packet of butter at the supermarket on the corner of the street.

5. VBHC focuses on the disease, not the person

VBHC is based on a disease-specific chain care approach. The disease or disorder is the starting point for optimising the provision of care. On the basis of VBHC, someone with several chronic or complex conditions ends up in several chains or care pathways simultaneously. This has many adverse effects, such as unwanted hospitalisations, increased risk of mortality and polypharmacy. In other words, the law of the inhibiting chain. For people with complex and multiple disorders, VBHC leads to fragmentation of care. With his VBHC approach, Michael Porter forgot to take into account that a person is more than the sum of his disorders and/or diseases.

Towards care networks that work

So should we just throw VBHC overboard? VBHC is an excellent method for improving low-complex care processes within the walls of a hospital, for example. But for more complex issues, a broader view is needed. Think of an elderly patient with diabetes, heart failure and depression who has to deal with ten different care providers. This patient does not benefit from integrated care, but from coordination of all the care he receives. In other words, network care. In network care, all care providers involved have their own roles and responsibilities, but work together in a coordinated way and share responsibility:

1. The right care in the right place

International research shows that much care is provided in the wrong place, leading to undesirable health inequalities and unnecessary costs (McGlyn et al. 2003). The Netherlands also excels in this (see Figure 1). The big challenge, therefore, is to provide the right care in the right place. It is important that the needs of the patient are central, not the supply of care. But how do you identify those needs while, as a care provider, you are swallowed up by daily practice? By investing in knowledge development and using smart algorithm  (Casalino et al., 2003). In this way, you can better direct your practice to the actual care needs of your patients. There is a lot to be gained in this area by applying the right analyses to GP information systems (His’s) and hospital information systems (HIS’s), for example. Unfortunately, this is still done very little in practice.

Figure 2: (In)efficiency of care in the Netherlands

Global Healthcare Efficiency Score Essenburgh Research & Consultancy

2.Care coordination

Healthcare providers are expected to provide the best quality of care at the lowest possible price. In other words, to steer for cost-efficiency. This works best in care networks (Casalino et al. 2003). Only in a care network, for example, does it make clinical and financial sense to use a more expensive medicine that reduces the need for hospitalisation. If all the healthcare providers involved work in isolation, this situation will benefit the patient and the pharmacy, but harm the hospital. And to give another example: when needs change and a patient is transferred to another healthcare institution, it is useful to know which tests and procedures have already been carried out to avoid double diagnosis. In short: when there is no integral business case for all organisations involved, competing financial interests will make an integral approach difficult or impossible in practice.

3. Shared information.

A third characteristic of a well-functioning care network is shared electronic patient records. If, as a healthcare organisation, you have your data in order and then share it with collaborating organisations in the region, you can use smart data analyses to identify trends and predict future demand for care.(Enthoven & Tollen 2004). This will lead to better regional coordination of care on the one hand and the possibility of outcome-based funding on the other. To achieve this, modern ICT systems are needed, as well as healthcare professionals who can make sensible analyses of the available data. As collaborating healthcare providers, this is easier to realise and cost. Research shows that large multidisciplinary teams are more likely to invest in such an approach (Audet et al. 2004).

4. Population approach

Research also shows that a population-based approach leads to better quality of care at lower costs (Newhouse, 1994)(Enthoven & Talbott 2004). A population approach implies that care is organised at the level of, for example, a neighbourhood, region or province. In other words, you tailor the care to the current and future needs of the local population. This is done with the help of risk stratification models (see our previous blog on this subject). By using algorithms to manipulate data, patients can be categorised fairly easily on the basis of risk profiles, such as high, increased and low risk. You then organise customised care around these risk groups, so that healthcare providers actually offer the right care in the right place. This also leads to a more sensible use of time and resources. Instead of scheduling ten minutes for each consultation, you can distinguish between the risk groups. Low-risk patients are given less time and high-risk patients more, allowing you to help the latter group better and probably see them less often at the consultation. In this way, you can offer customised care that costs less and will lead to greater satisfaction among patients and healthcare providers.

Looking beyond VBHC

In conclusion, we can say that Michael Porter’s VBHC-concept is an outdated concept, created by one of the many management gurus in the world. The model is useful for an organisation to work with internally, but it is not a solution for the real healthcare issues of this time. In fact, if we implement VBHC in detail, it will lead to further fragmentation and reduced accessibility of care. Exactly the opposite of what is really needed. The only correct answer to the problems we are now facing is cooperation in care networks. Various studies show that an integrated network approach leads to lower costs and better outcomes for everyone. So let’s stop chasing the next management guru, and start thinking about the solutions that will provide the real answer to the health issues of today and five years from now. This means thinking and acting integrally instead of organising everything further into boxes and finding out ten years from now that we have excluded the most vulnerable groups in our society from care. In short, there is plenty to do!

Find out more

Want to know more about care networks that work? Download the ebook Care networks that work; The key to better outcomes .

Pim Valentijn

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