Whose values are represented in value-based healthcare?

‘Don’t you see that the whole aim of Newspeak is to narrow the range of thought? In the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it’. – George Orwell

Value-based healthcare is a model where providers, such as hospitals and physicians, are paid based on health outcomes against the cost of their delivery (Porter, 2010). This is in contrast to fee-for-service, capitated approaches, and activity-based funding where payment is dependent on the volume, factoring in case complexity, of healthcare services provided to people. For instance, public mental health services in Australia are largely funded through block grants.

Value-based healthcare features in the submission of Honeysuckle Health (HH) to the Australian Competition and Consumer Commission (ACCC) for the formation of a buying group that would act on behalf of a significant proportion of private health insurers (PHIs) and other third-party payors, such as worker’s compensation providers. HH is a joint venture of Australian health insurer NIB and Cigna Corporation, a global health services company based in the United States. Although superficially attractive, much depends on how value-based healthcare is defined. Of concern is the possibility that PHI-payors will use a narrow interpretation of value-based healthcare as a way to reduce costs through inducements and financial penalties rather than one that encompasses healthcare outcomes that are important to patients and carers (Zanotto et al., 2021). We discuss the implications of a narrow PHI-payor-driven implementation of value-based healthcare, based primarily on cost reduction, for private psychiatric practice in Australia.

There is a danger that PHI-driven value-based healthcare could replace existing practitioner and patient-driven assessments of the quality and safety of healthcare, including outcomes and cost-effectiveness. For instance, private and public hospitals and community services have already adopted outcome measurement as a routine. In mental healthcare, casemix and outcome data are collected by the Australian Private Hospitals Association Private Psychiatric Hospitals Data Reporting and Analysis Service, the Australian Institute of Health and Welfare, and the Australian Mental Health Outcomes and Classification Network. To date, the focus has been largely on patient outcomes rather than solely on costs. However, the HH interpretation of value-based healthcare may change the status quo primarily towards cost containment.

The evidence to date is not encouraging, with limited data on outcome measures that are relevant to mental health patients. More broadly, a systematic qualitative review of the outcome research on value-based healthcare in general found that of 47 included studies, only 16 used patient-reported outcome measures, and only 3 reported comprehensive outcomes (Zanotto et al., 2021). This was less than those specifically reporting cost-saving outcomes. Importantly, these data are derived entirely from studies of primary care, medical and surgical specialities, and not mental health services. Zanotto et al. (2021) concluded that a more comprehensive approach to assessment and implementation of value-based healthcare was needed, specifically focussing on the gap in outcome measures that are relevant to patients. Given that, formally defined value-based healthcare initiatives have not demonstrated effective outcome measurement – how then can the ‘value’ of healthcare be assessed?

The concentration of bargaining power within a PHI buying group may allow the imposition of their definition of value-based healthcare (Looi et al., 2021a). As business entities, PHIs and payors are primarily responsible for their owners/shareholders and thus are profit-focused (Looi et al., 2021a). This likely explains the focus on financial cost-saving, thereby maximising profit for shareholder benefit, as highlighted in a previous systematic review of value-based healthcare (Zanotto et al., 2021). Accordingly, a buying group representing PHIs will primarily be motivated by cost. As a result, psychiatrists could be subject to individual selective contracting, with non-disclosure agreements, which also include financial performance inducements and penalties (Looi et al., 2021a). In addition, this arrangement could cut costs through managed care by prospective and retrospective gatekeeping of access to hospital and allied healthcare, as well as algorithmic management protocols that limit patient and psychiatrist choice (Looi et al., 2021a). This fiscally focused value-based healthcare model would have minimal regard to the values of patients or their doctors.

The United States is where this process is most advanced, including adoption by public sector health insurance programmes, Medicare and Medicaid (Looi et al., 2021b). The formation of the huge HH buying group will certainly affect private practice, and its influence might also spread to the Australian Medicare system with the adoption of a narrow fiscally driven model of value-based healthcare. Despite their widespread use, there is little evidence that value-based healthcare incentives for providers are effective in improving patient outcomes (Scott et al., 2018). Indeed, the more rigorous the study design, the less evidence there was of positive outcomes. There were few differences by country, primary versus acute care, pay-for-performance with incentives to reduce costs, or pay for performance alone (Scott et al., 2018). Pay-for-performance was less effective than paying for specific quality improvements, and there was no association between positive outcomes and the amount of financial incentives (Scott et al., 2018).

In conclusion, the fiscally focused HH version of value-based healthcare is predicated on managed care incentive models that are ineffective in either cutting costs (Scott et al., 2018), or assessing and achieving patient-relevant outcomes (Zanotto et al., 2021). As Orwell observed, the meaning of a word, such as value-based healthcare, can be forcibly defined by the user of the term, and, for PHIs this could mean profit. In turn, the resulting healthcare system would be constrained to target profit. Comprehensive value-based healthcare should therefore be firmly based on outcomes that are important to patients, as well as the accurate measurement of efficiency and effectiveness of care. These factors must be considered together to assess the true value of healthcare. Psychiatrists and patients must advocate for comprehensive evaluation of mental healthcare in the private and public sectors, arguing against the fiscally focused PHIr version of value-based healthcare that will reduce choice and access to care. Otherwise, as Porter (2010) warned, ‘Cost reduction without regard to the outcomes achieved is dangerous and self-defeating, leading to false savings and potentially limiting effective care’.