Vic Management Interns' blog

Blog posts by Victorian Management Interns of the Australasian College of Health Service Management. Views are those of the individual authors and not those of ACHSM or management interns’ host organisations or employers.

Sharnee Trehan
Sharnee Trehan
Sharnee Trehan's Blog

Value based health care model and leadership (By Tinto Cherian)

By Tinto Cherian

2nd Year Management Intern

Value based health care model and leadership

Disclaimer: Information presented here is of the author and don’t represent the views of the Department of Health.

Rising healthcare costs [1]  is driving Australia to contain costs while improving the quality of care. Value-based health care (VBHC) model is one such approach that is explored around the world that focus on the ‘value of care provided’ rather than the ‘volume of services’ and prioritise patient outcomes while reducing costs. 3

Significance of Value Based Model

Value-based health care is based on the concept of patient centred health care with focus on health outcomes that matter to patients.4 Some of the benefits of value based funding models are shown to be better patient outcomes,  lower healthcare costs,  better coordinated patient care  and improved patient satisfaction.5

Strategic implementation of this model could encourage innovation in the current complex health system that can drive value-based growth and value enhancing improvements.6 In Health care, funding models are often perceived as reasons for care fragmentation 7 and value-based healthcare models can be a means to address the concerns of variations in care. This model motivates healthcare providers to work together to coordinate care, to improve the quality of care and reduce costs. 8  An implementation case study notes that value based care measured on standardised outcomes will improve collaboration and shared treatment decision between providers and healthcare systems. 9

Value based model of care places patient at the centre of care, ensures patient engagement 10 in their own care, shared decision-making and also highlights the need for aligning services according to individual needs11 . Introduction of value-based models, even though demands different ways of delivering care and altered workflows, have shown to improve job satisfaction and increased meaning in work 12and allows physicians to think differently about their role within the larger care team. 13

Challenges for Value Based Model

However, there are challenges associated with introducing a new payment reform 14, especially with complexities in the implementation of outcome measurements.8 In value based health care funding models there is a funder to provider shift of risk, prompting the need to incentivise providers appropriately to deliver high-value care, address the financial risk caring complex patients. 15

The complex process of data collection and analysis is another significant hurdle for implementing a value-based health care model. Establishing standardized data collection methods, data analytics capabilities 16, value outcome measurement 17 and tools to record patient outcomes 18 are required to effectively measure value of care for funding.

Successful adoption of value-based health care models may require healthcare provider buy-in, by measures to increase provider awareness and understanding of VBHC models and to align with the interests of patients and the goal of value 19.Implementing the model and associated funding mechanisms may also require significant changes in healthcare delivery and payment systems, implementation costs associated with investments in resources and tools, investment in information technology, data collection 20 and increased resource and energy allocation by providers.12

There are also arguments highlighting limited evidence for value-based health care models, particularly in Australia. There is growing calls for better technology infrastructure, effective health informatics platforms, increased awareness on model 15 and further research to prove better health outcomes measurement, costs, and patient experience to determine their effectiveness in improving healthcare delivery. 8

Value based Healthcare in Australia

Value-based health models has been implemented in other countries for some time now. Commissioning for Quality and Innovation (CQUIN) payment framework in UK operate on the principle of Improving value for patients 21. Similarly, there are multiple value based programs of Centers for Medicare & Medicaid Services, in US that rewards providers for the quality of care 22 Value-based healthcare is gaining traction in Australia23, with several healthcare providers adopting the model. Victorian Clinical Council, in 2019, noted that implementing value-based health care can create value across the health system by embedding patients and clinicians in the process and to accurately and systematically measure outcomes that matter to patients 24.

Some important adaptations of similar outcome-based model in Australia are pilot of Diabetes care project 25, the trial of Health Care Homes program 26  and in Dental Health Services Victoria (DHSV). Value based health care is pursued as a strategy to improve care and health outcomes in NSW with trials and programs like leading better value care, integrated care, commissioning for better value and collaborative commissioning 35. The value-based care model by Dental Health Services Victoria (DHSV) highlights the potential for health system transformation and population health outcome benefits along with the importance of cultural, organisational and leadership aspects for effective implementation 27.

Leadership for Value-based Healthcare

Effective leadership is crucial in the success and uptake of a value-based health funding models in the Australian context. To promote patient-centred care model, Health care leaders must be better engaged 28, facilitate better communication 29 , make data-driven decisions 30, and increasingly rely on teamwork and collaboration 31.

For value based healthcare model to play an important role in Australian Healthcare, leaders must also be efficient to address challenges such as limited resources 32, resistance to change and the complexity of the healthcare system. Leadership that enables a culture for change, effective communication and provision of ongoing guidance and resources have proven to be most resourceful in implementing value based care 33. Value based health care, like any new model of care, will require disruption of status quo and leadership should be reoriented to this shift of power to realise the truly patient centric benefits. A recent systematic review notes implementation of value based health care models demand organisational support and engaged leadership for employee wellbeing and positive experience 12.

Learnings from VBHC model of care implemented by DHSV at the Royal Dental Hospital of Melbourne (RDHM) in 2018 identifies the importance of change management, staff engagement, transparent communication, clear governance structure and an ecological approach to organisational change.27 Leaders will also need to think outside their organisations and boundaries and take into consideration health sector as a whole for value-based models to be sustainable.6

Even though, there are considerable differences in conceptualisation of value based health care models and may significantly vary in how it is interpreted 34, all initiatives tend to be patient-centred in care delivery that is outcome-based and incentivise quality. 3 Acknowledging the challenges, value based health care model is one prominent answer at present to the growing concerns of challenging healthcare future and increasing cost allocation for health.


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