Healthcare value can be generated in many ways, but it is oftentimes difficult to assess and estimate. Value can be generated in a variety of ways, including through quality improvement initiatives, the adoption of a new process or system, or the use of a new treatment or device. When trying to assess or estimate the value associated with a new product, process, service or device, one of the main challenges is identifying all the potential sources and types of value.
Below, I offer a comprehensive list of value types that includes five main categories: utilization, efficiency/reduced waste, patient experience/health, administrative and societal. For each category, I include different sources of value one may encounter. There is overlap between some of the categories because many are closely related. For example, reducing wait times in the ED might be considered an improvement in efficiency, but it can also lead to better patient outcomes, improved patient experiences, and a better facility reputation, all of which are in other categories.
I’ve been in the weeds many times throughout my career and understand how healthcare companies can get stuck when it comes to effectively communicating their value. As an external expert, my role has been to offer a fresh perspective to help healthcare professionals think about value sources and help bridge the gaps in translation between disorganized data and identifying and showcasing the value associated with their solution. That’s exactly what this exercise aims to do.
This is probably the type of value that comes to mind first and reflects a reduced “need” for care resulting from higher quality care or improved patient health. This category encompasses much of what we strive for when improving care or introducing a new treatment or device. In addition to real decreases in utilization, the reduced risk of utilization also belongs in this category. Much of this category is typically measurable and monetizable, and it is also often attributable to a specific intervention or change. Common types and risks of utilization include:
- Lower incidence or prevalence of disease
- Fewer (actual or risk of) adverse events or need for health encounters
- Lower intensity of care or length of care (e.g., length of stay, use of ICU, fewer medications, faster recovery, etc.)
Value to Whom: Most often, lower utilization has value for payers, but may also have value from the perspectives of patients, caregivers, providers and society.
This category has some overlap with the utilization category. For example, if a new and improved care protocol reduces the need for redundant lab tests, one could consider that as lower utilization. But, one could also consider it to simply be more efficient care: there is less waste (redundancy) because fewer unnecessary tests are performed. This category also tends to include value to a facility or care delivery system (like a hospital) for care that is reimbursed by a bundled payment. If care can be provided more efficiently, the hospital spends less money caring for the patient while still receiving the full reimbursement amount. Most of this category is measurable and monetizable, but sometimes attribution to a specific cause can be challenging. Examples of this type of value include:
- Lower resource use (e.g., fewer lab tests, less time in OR)
- Fewer treatment errors
- “Faster” care (e.g., shorter wait times, faster time-to-treatment)
- Better/more accurate diagnosis
- More continuous care, less discontinuation of care/therapy, less duplication in care or services
- Better use of staff time, appropriate level of FTEs, less turnover, etc.
Value to Whom: Better efficiency typically provides value to payers and/or providers, but may also provide value to patients, caregivers and society.
Patient Experience and/or Health:
This is a broad category and includes everything from the satisfaction a patient has with their care experience and their relationship with the health system to the quality of life and well-being that results from care. These days, there are tools that can be used to measure many of these types of benefits, but it’s not always the case that they are measured. Whether or not they are monetizable is variable and often depends on the perspective used (i.e., a payer may have difficulty monetizing a patient’s well-being, but that patient may be able to monetize it by linking it to their level of independence or need for supportive care). Examples of this type of value include:
- Improved health and/or quality of life (increased survival, lower disease severity, quality-adjusted life years [QALYs], slower disease progression, reduced symptom burden, fewer side-effects, etc.)
- Higher satisfaction (with care quality, with provider, with care experience, etc.)
- Improved trust (e.g., patient-clinician relationship, level of communication/honesty, etc.)
- More patient engagement/self-efficacy
- Reduced disease burden (e.g., pill burden, comorbidity burden, life interference, etc.)
- Improved emotional/psychological/physical/social well-being (everything from level of depression/anxiety to things like confidence, peace of mind, gratitude, functioning, socialization, isolation/loneliness, etc.)
- Reduced caregiver burden
Value to Whom: These examples usually reflect value to patients as well as their families and caregivers. There is often some amount of indirect value for providers that may manifest as improved job satisfaction or increased efficiency. Payers may also experience value indirectly since it may boost member retention or reflect better population health, which in-turn can result in lower utilization. Clearly there is societal value as well.
The administrative category includes anything and everything that a facility or care delivery system may find value in. Increases in revenues or reductions in costs associated with the “business” of delivering care are sometimes the primary goal of an intervention or change, but sometimes they are a bonus that comes from providing better or more efficient care. These are almost always measurable and monetizable (but not always attributable). Examples include:
- Increased revenue from risk pools or from performance-based reimbursement mechanisms
- Patient/member retention
- New patient/member initiation
- Reduced (actual or risk of) litigation
- Improved brand or reputation
- Increased regulatory compliance
- Reduced facility/equipment costs
Value to Whom: Most often, healthcare providers are the ones who reap this value.
The value to society is not always considered, and by its nature can be difficult to measure or monetize. Further, it can be difficult to differentiate societal benefits from those linked to the patient or their caregiver. For example, a healthier patient probably has less work absenteeism and higher productivity, but one could argue whether those are societal or personal benefits. Or, is a reduced caregiver burden appropriate here or in the patient experience category? It’s debatable.
- Increased work productivity
- Reduced work absenteeism
- Increased societal output
- Improved equity (in all aspects)
- Reduced criminal justice system burden
- Reduced need for social safety nets (components of this might be viewed as improved efficiency of social spending and resource allocations)
Value to Whom: As the name implies, these typically produce value for society as a whole.
Hopefully this list will be helpful the next time you’re trying to identify all of the possible benefits or value sources for your product, service, device, process or solution. If you think I’ve omitted any, please let me know in an email!