Recently, I had the opportunity to attend the Financial Times US Health Care and Life Sciences Summit. These FT conferences bring together the best and brightest in the industry, and we were fortunate to gather some of the best minds in the business to dig deeply into the move toward value-based care and outcomes-based pricing in the United States. As the US health care industry faces pressure to define and demonstrate value, the shift is getting more “real” with each passing year.
The panel discussions were illuminating. One, entitled, Drug Pricing: The Dawn of A New Era?, highlighted the dichotomy between what the US drug industry contributes – how it develops and pays for drugs around the world – and how that value is perceived. Some of the presenters said what we’re doing today to prepare for that future isn’t working. They advocated for thinking more broadly about methodologies to determine value, noting that the shift toward value-based pricing depends on the power of the market.
About 77 percent of participants surveyed at the conference said they anticipate patent-protected prescription drug prices to continue to rise over the next decade, but more slowly than in the past. One area of emphasis among the FT panels was the need to look at value-based pricing approaches, identify drugs that are most critical to human health and urge insurers to cover them in their plans. So often the patient experience gets lost in this conversation.
Another panel, Value Gets Real: Navigating the Shift to Value-Based Care and Outcomes Based Pricing, focused on why industries shouldn’t point fingers at others in the health care system, but collectively work to reshape how incentives are aligned. Panelists discussed why the Center for Medicare & Medicaid Services (CMS) has struggled with its Accountable Care Organization program the past two years, losing money in the process. Medical errors are now the third leading cause of death in the United States. Doctors, hospitals and drug makers often lack the incentives under the current system to make value-based care a priority. We celebrate and reward entrepreneurship in most sectors, but that isn’t always the case in health care.
Exploring how collaboration across industries can lead to more effective use of finite resources was just one of the recurrent themes of the conference, as was how the drive toward value-based care is changing the industry overall. The Deloitte Center for Health Solutions paper, Delivering medical innovation in a value-based world, looks at how value-based care (VBC) models could evolve to encourage innovation.
An estimated 40 percent of all health care dollars are tied to VBC and value-based payment and 63 percent of attendees believe the majority of the US health care system will be paid on value within the next 6-10 years. But is the health care industry positioned well enough to take the next step toward transformative change?
A growing number of organizations are moving from the “break/fix” model to a strategy that emphasizes prevention and predictive maintenance, which can lead to better outcomes. New partnerships are developing, engaging traditional industry players and reaching out to less conventional entities in the public, private and academic sectors. Multidisciplinary care is becoming more prevalent.
Getting physicians to transform how they deliver care can be difficult. Physicians at the center of the system are looking for change, but don’t want to sacrifice job stability. Physicians’ performance measures are influenced by many things they can’t control. They want the flexibility to make dramatic improvements, and to have greater say in how value-based care is priced and conducted. Many hospitals do not have strong enough financial incentives yet to introduce the kind of pricing and service changes needed to promote value. The industry impact could be reduced competitiveness globally unless we align goals and streamline the system.
What’s next? Powerful forces driven by the growing role of health care consumerism, combined with new value-based incentives created by new and innovative collaboration, will continue to reshape how health sectors operate. There will be winners and losers in the short term, and while it’s impossible to predict the future decades out, a system supported by quality, value and stakeholder partnership is a strong bet to succeed.
Interested in learning more about the discussions from the FT US Healthcare & Life Sciences Summit? You can view recordings of all the panel discussion here.