Essays June 2018
Value-Based Healthcare - The Role of the Vendor Community
Value is in the eye of the beholder! Successful organizations understand that marketing, selling and delivering value is their responsibility.
Yet if we look back over ten, fifteen or twenty-years, we can see that many of yesterday’s industry leaders have failed to deliver value. Many of these powerhouse companies no longer exist.
In healthcare, delivering value – measured by client-centric outcomes for dollars spent - is a constant and dynamic challenge. For those vendors who focus on the healthcare market, and who strive for sustainable success, their strategies and programs must appeal to a diverse stakeholder community – healthcare providers, payors, policy makers and, most importantly, patients.
A recent JAMA article, “Health Care Spending in the United States and Other High-Income Countries,” (Papanicolas et al. 2018) provides compelling evidence that the challenges within the global healthcare systems are real, are growing and will not go away. Indeed, delivering value will be still more exacting as global healthcare markets experience growth in chronic diseases, an aging populace and the rise of patients with multimorbidities. These trends will necessitate a greater focus on value-based outcomes.
These realities are formidable, but they can also be seen as providing significant opportunities. Healthcare vendors can seize the challenge and provide meaningful, measureable and timely value to their healthcare clients.
#1 Meaningful Value
Vendors need to deliver value to their clients by understanding the respective goals of both their clients, and the clients of their clients – specifically, the patient. They must think like the client. They need to consider what keeps their clients up at night?
Will the vendor community be prepared to contractually commit that their products and/or services will improve the client’s stated problem and defined goals. Will they provide innovative and creative education and training for medical professionals, so that the delivery of their products and services is customer-centric and meaningful?
#2 Measurable Value
Vendors need to provide products and services that offer measurable returns. To do this, they must begin to ask, “What are the socioeconomic and demographic trends and realities that shape our clients’ day-to-day operations? What new compelling event, or events, can or will change their clients’ clinical, operational and/or financial realities as it relates to the stakeholder community? And what are the benchmarks of success, in terms of measurable value?
Vendors will still need to know their products and services inside out. But now they will need to communicate and transition their products and services into a value proposition that aligns with their clients’ clinical, operational and/or financial realities.
Will they be willing to share in the financial risks of delivering quantifiable value? Will their internal compensation packages align to the market’s needs and realities so that their products and services can translate into measurable value for the end-user customer?
Gone are the days when vendors enjoy market success by being the lowest cost provider. History has clearly demonstrated that the lowest cost during the procurement phase does not necessarily equate to a positive return on value. The challenge will be more on how does that product or service enable quantifiable value to the expectations and objectives of the provider, payor and patient community.
#3 Timely Value
The evidence is clear and compelling for meaningful change. Discussions on what the trends, issues and barriers are for change have been debated ad infinitum. We can continue to have these discussions or we can take measured, disciplined and evidence-based actions today.
The vision and journey to meaningful change must understand the realities of change management. Change, especially when it is not well understood or communicated, is challenging to the best of us. The dilemma in healthcare is that meaningful change is required today, but must proceed with disciplined and measured vigilance. History has clearly demonstrated that neither vast sums of monies or large-scale implementations have produced the desired results.
As value-based healthcare is a journey for the entire community of stakeholders, understanding where we need to go and why is strategically important, but the initial steps are critical for success. Vendors need to embrace an environment of collaboration and realize that those initial small successes will be their foundation for long-term success and separate them from traditional vendors. When stakeholders can visualize, and measure, how seemingly small-scale projects can produce desired results, the journey of change management has been established.
One critical point to consider – if the vendor community is corporately committed to meaningful, measurable and timely value to their clients, will their clients collaborate with innovative and creative procurement programs and practices that will reward the delivery of enabling value that are aligned to the key objectives of value-based healthcare? Is there a commitment and willingness to transition procurement processes to best value-based healthcare practices?
This new world of healthcare can be either great news or a daunting reality to the vendor community. If there is a collaborative commitment to transition from today’s procurement processes to value-based healthcare practices, I am confident the outcome will be a win-win-win-win scenario. Win for the healthcare providers, win for the payors, win for the vendors, and most importantly, a win for the patient and their families.
About the AuthorRon Kaczorowski is the President of SecurLinx (IBO), Managing Director of Mareka Alliances and the former Chair of the Kensington Health Centre. He can be reached at firstname.lastname@example.org.
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