1.3 Components of value-based healthcare

Measuring health outcomes and costs

Outcome measures reflect the impact of the healthcare service or intervention on the health status of healthcare consumers. Clinical outcomes are measured by activity data such as hospital readmission rates, agreed scales and other measurement forms. Health outcome data is recorded by clinical staff such as doctors, nurses and allied health professionals with the help of health information managers as required.

The aim of measuring outcomes can be diverse because it must be viewed through the lens of the consumer in value-based healthcare and includes guiding clinical decision-making, initiating improvement interventions, benchmarking, monitoring, scientific research and, importantly, public accountability. An outcome measure is a tool used to assess a healthcare consumer’s current health status. It may provide a score, an interpretation of results and, at times, a risk categorisation of the healthcare consumer. Before delivering any intervention, an outcome measure provides baseline data.

The Centers for Disease Control and Prevention’s ‘Healthy Days Measures’ assesses four key domains: self-rated general health, physical health, mental health and activity limitations. These domains provide a good set to start outcomes measurement, and others are used to varying degrees of success.

Cost measurement is always a contested terrain. There are traditional ways of paying providers of healthcare. Follow each of the links to learn more about each method:

1. Fee-for-service (FFS)
2. Salary and wages for services
3. Global budget
4. Activity-related payments such as diagnosis-related groups
5. Capitation
6. Pay-for-performance
7. Bundled payments

This list represents the more common methods, and you may come across more as you undertake further reading on this important health leadership topic.

The last three on the list are often associated with a value-based healthcare approach.

Quality and safety considerations

Credible research and lived experiences related to quality and safety provide a foundation for the requisite evidence-based practice in healthcare and other services offered to individuals. Quality and safety processes identify necessary changes to improve clinical practice and health outcomes. They also help reduce risks and harm associated with care delivery. Australia is fortunate to have the Australian Safety and Quality Framework for Healthcare, which specifies three principles for safe, high-quality, consumer-centric care driven by information and organised for safety. The evidence suggests that there are important considerations when improving the safety and quality of care provided. The following are some strategies to consider when thinking about how a leader can enhance the quality and safety of care.

Minimising variation from standard procedures during care

Substantial variation in healthcare outcomes or processes is an alarm bell that should make us stop and investigate whether appropriate care is being delivered. Variation is not necessarily bad; when it reflects differences in health consumers’ needs, it can indicate high-quality healthcare (Australian Commission on Quality and Safety in Health Care, 2023).

Leading teams with effective task management

There are various skills that a leader exhibits for effective task management. Managing tasks effectively requires the leader to set priorities and triage tasks according to their criticality. Most team members’ work times centre on undertaking certain tasks successfully. These tasks might be repetitive or one-off, and the leader must inform team members of their priority among many functions that all seem like high-priority tasks (Shafique et al., 2020). To be effective, leaders must balance the workload and the time management skills of those on their teams when delegating tasks (Racy et al., 2021).

Using advanced communication and listening skills to support effective task management

Another skill essential to effective task management is active listening, which helps the leader build strong relationships, makes team members feel heard and understood and helps to build trust because team members feel they have a voice and perceive the leader as authentic (Olley, 2022).

Improving care coordination and patient flow between departments or services

There is considerable evidence that value-based healthcare focuses clinicians on improving patient flow, thus helping to achieve timely and optimal care by forming a leadership structure and selecting conditions to be treated using value-based healthcare principles (Hernandez et al., 2019), adding patient wellness in a value-based healthcare framework (Goretti et al., 2020), clinical outcome improvement (Ackerman et al., 2019; Danilyants et al., 2019; Glotzbach et al., 2018), patient-reported improvement (Ahn et al., 2019; Colegate-Stone et al., 2016; van Egdom et al., 2019) and achieving optimal health outcomes (Goretti et al., 2020; Hernandez et al., 2019; Parker et al., 2017; Thaker et al., 2016). These initiatives reported in evidence related to the implementation of value-based healthcare help with timely care, achieving patient satisfaction with care outcomes, decreasing the length of stay and reducing the cost of care while achieving high-quality care.

Expanding partnerships

Partnering with patients in their care is an important component of person-centred care because of the focus on the relationship between the clinician and the patient, with trust, mutual respect and knowledge sharing required for the best health outcomes (Australian Commission on Quality and Safety in Health Care, 2024; Stevenson & Kaafarani, 2011). Other partnerships are also important in value-based healthcare for collaboration, innovation and cost-effectiveness. Healthcare providers form these partnerships with shared values and a common vision for what can be achieved on behalf of and with the patient. These partnerships might be with a transitional care provider to optimise discharge planning and bed-day utilisation, diagnostic services providers, community care organisations or partnerships forming integrated care networks. Value-based healthcare requires these partnerships to be developed, nurtured and evaluated.

These quality and safety considerations rely on leadership to plan and implement them, and healthcare leaders must understand and embrace them and lead their teams to success ethically and authentically.