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Value Based Healthcare

Value-based healthcare: Is India ready for a paradigm shift?

1. Executive summary

Traditionally, from the payment perspective, the healthcare model has been fee for service, where payment is made on the basis of the number of services provided. This model results in a definite conflict of interest from a patient’s perspective as the focus is on quantity rather than quality of service. However, this model is slowly being replaced by valuebased care, where payment is outcome based and providers are rewarded according to the quality of the treatment received.

The major aims of value-based care are implementing continuum of care, enhancing patient experience, standardising outcome and cost of care, and treatment delivery through a collaborative chain of  activities with measurable outcomes. The different value-based models range from bundled payment to shared risk and shared savings models, depending on the focus of care and financial flexibility.

The need for value-based care is realised because of increasing healthcare expenditure, excess healthcare costs attributed to unnecessary and inefficient services along with uncoordinated care. All these factors coupled with increased patient expectations have set the stage for the adoption of value-based healthcare, where the payment for care is tied to clinical outcomes and service quality.

Implementation of value-based care would require the building blocks of public financing, resource availability, utilisation of technology and a collaborative ecosystem. In the context of the Indian healthcare system, which largely operates on the fee for service model and has high out-of-pocket expenditure, inadequate infrastructure and technology support, implementing value-based care would require in-depth strategic and financial planning along with transformation of the delivery model. The Government is also expected to play a significant role by implementing enabling policies. Going forward, Ayushman Bharat, with its focus on Government funding and preventive as well as curative care, will lay the foundation for valuebased care implementation in India.

Once implemented, value-based care will likely result in today’s fragmented care delivery evolving into tomorrow’s circle of care. If implemented as envisaged, in five years, we could look at saving almost 9 lakh lives and reducing healthcare cost by around INR 4,000 billion.

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