Value-based care: why it matters so much now

The twin challenges of last summer’s bushfires, swiftly followed by the COVID-19 pandemic, have exposed critical bottlenecks and vulnerabilities in the Australian health system, notwithstanding our relative success in meeting healthcare needs during this period compared with many other nations.

Our experiences addressing these challenges can provide a catalyst for reimagining healthcare, which will be required as we grapple with significant economic downturn, and its impacts both on available funding for healthcare and on the health and wellbeing of Australians.

The recently signed 2020-25 Addendum to the National Health Reform Agreement provides important opportunities for new thinking in the way health is delivered, including opening the door for system-wide attention to value-based health care (VBHC).

Much more than just a trendy catch phrase, value-based health care focuses in on the outcomes that matter to patients, delivered at a cost that is acceptable to patients and funders.

There is little argument that health providers want to provide care that improves the health and wellbeing of patients; that patients should be more engaged in deciding what they want to achieve out of their healthcare; and that we all should have an interest in doing this in the most affordable way possible.

However debate has arisen around issues such as:

  • funding models (Is this just a cost-cutting measure? Can a system focused on paying for performance and activity shift to paying for value?)
  • ability to measure health outcomes, including what matters to patients
  • how clinical leadership and patient engagement can be structured effectively into models of care
  • professional and provider resistance to alternative workforce and payment models.

The Addendum to the National Health Reform Agreement provides a base for system innovation across at least the first two of these issues.

The provision for the Independent Hospital Pricing Authority to approve trials of innovative funding models, including bundled payments, is a significant opportunity for state health departments and public hospitals to put forward proposals that focus on value rather than activity.

The commitment to develop national approaches to measuring health outcomes suggests new ways of thinking about performance and accountability in our health system, beyond the traditional approaches to reporting on inputs and outputs.

Importantly, better integration between the primary and acute care sectors is flagged, through specific provisions requiring Primary Health Networks and equivalent hospital networks to formalise agreements around their shared responsibilities for the health of the communities they serve.

Missing from the Addendum is greater recognition of the social determinants of health, a key gap in the work required to shift to value-based healthcare.

We should be factoring into our health policy decisions determinants, such as housing, income and employment. We should be breaking down the silos between departments of health, community and social services. We should be sharing data across these three areas and looking for smart ways to achieve better health outcomes and ensure nobody is left behind.

Whether the innovation anticipated in the Addendum can be translated to scalable long-term reforms that focus on value over volume, remains to be seen.  Yet we must not shy away from the need for these reforms.

Now more than ever, we need to ensure Australia’s health system is sustainable and resilient, focused on the best possible health outcomes for all Australians, and capable of absorbing shocks, such as we are now experiencing and may well experience again.

For more information on value-based healthcare, see:

To access the Addendum to the National Health Reform Agreement, see here!

Alison Verhoeven
Chief Executive
Australian Healthcare and Hospitals Association