Q: What is value-based contracting?
A: Value-based contracting is a type of payment model that ties the price of a drug and supporting patient services to specific health, economic or experience outcomes. What we’re trying to move towards is a model that better aligns all stakeholders’ objectives for the long term. With value-based contracting, there should be a “triple win” so patients, healthcare payers and life science companies benefit. At its simplest, if a drug and associated services deliver a pre-agreed outcome, an agreed price is paid; if the drug and service fails to deliver then healthcare payers do not reimburse the cost.
With value-based contracting, there should be a “triple win” so patients, healthcare payers and life science companies benefit
Q: Why is this a hot topic now?
A: Public health systems all over the world are under great pressure to deliver value for money at a time when demand for care is growing. The big question is how do we fund healthcare over the next five to ten years? At the same time, the life sciences sector is producing some amazing science and coming forward with an extraordinary number of new medicines. The top ten life science companies will deliver somewhere between 350 to 400 new medicines between now and 2026. These new drugs are likely to be more focused and more effective. But they are also likely to require additional funds. Value-based contracting could be an attractive option to assure appropriate outcomes are achieved.
Q: What are the advantages of value-based contracting?
A: The triple win of value-based contracting means everyone benefits. Patients get access to the best new drugs, healthcare payers get better value for money and life sciences companies are reimbursed a fair price for the medicines, which enables research and development to produce the next generation of drugs. Value-based contracting also creates greater transparency using readily available, but fragmented, data to help us understand what works best in terms of outcomes, as well as best value for money. Ultimately, value-based contracting enables better collaboration between the stakeholders for the long-term benefit of patients.
Q: What are the barriers to value-based contracting?
A: Value-based contracting represents a big change over the way we have worked for so long and it takes time for the many stakeholders involved to understand the impact and make the necessary adjustment. Most people in healthcare agree value-based contracting is the right step in principle. But they are looking for the evidence that it is practical. The life sciences industry wants to be sure they are still going to get a fair price for their medicines. Payers want to be sure it will lead to better value for money. Patients need to be reassured it will improve access to drugs, particularly those currently considered too expensive. So these stakeholders are looking for proof points. Inevitably, processes, mindsets and relationships need to change. One of the interesting practical challenges is agreeing what specific outcomes we are going to measure to determine whether “value” has been achieved and how we are going to measure it. We have clinical outcomes from trials, but other measures are less well understood, such as the economic impact of, say, enabling someone to return to work or to remain in their own home for longer. Then there is quality of life: how do you measure the value to someone of living with less pain or of a good night’s sleep? It is pretty complex.
Q: Does the NHS have systems in place for the adoption of value-based contracting?
A: Generally, public health systems such as the NHS do have good quality data. The issue is that it is fragmented and in many different formats. In the UK, we have clinical data from the NHS and also some data from NHS administrators on economic cost and patient throughput. But value-based contracting also needs to harness data from many other sources, including social care and local authorities. Employers will have information about patients returning to work. Other data will come from wearable devices or patient apps. Data is there and we can always create data if there are gaps. But there needs to be the confidence and trust to share data appropriately, especially in healthcare.
Q: What is the role of the patient in data collection?
A: It is important to address any concerns patients have around the confidentiality of their medical records. The data that underpins value-based contracting can always be anonymised. Personalised, targeted medicine and treatment needs will require patient data to succeed; the more data we have, the better the understanding of outcomes. One of the reasons why coronavirus is being resolved relatively quickly is because so much data has been shared, not just in the UK, but across the world. This has led to the development of vaccines, but also to improvements in the way we care for COVID-19 patients in hospital. I’m excited EY has managed to create the Health Outcomes Platform, a novel secure digital solution that brings healthcare stakeholders together seamlessly and encourages collaboration.
Q: Will value-based contracting transform care?
A: I am very excited about the potential for value-based contracting to help deliver significant improvements in outcomes for patients, while achieving better value for money for publicly funded health systems such as the NHS. There is much work to be done, to build trust among all stakeholders and to put in place agile systems that respond to changing information and requirements. But we are moving in the right direction.
For more information please email dmathews1@uk.ey.com
The EY solution
The EY Health Outcomes Platform is an industry-leading digital solution designed to help reduce the complexity, cost and risk of value-based contracting for all players in the industry. It has been designed from the start with the principle of providing the “triple win” for patients, healthcare payers and life science companies, and has been developed and tested in collaboration with leading healthcare stakeholders. In fact, the first proof of concept was in the UK. The platform works for any value-based contracting scheme and meets all the health data-sharing standards. Within six weeks, it could be possible to start managing contracts in a new way which we think is essential for the creation of an industry platform. Our Health Outcomes Platform can help unlock value-based contracting at scale for the benefit of all. It takes something complex and uncertain, for example agreeing the health outcomes measures and the sharing of data securely, and simplifies the process, providing the essential ingredients to manage and reduce the risk. By arming each party with the information required for success, we not only provide real-time transparency, but foster an environment of trust that is essential for long-term shared value creation.
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