Vabpro and fundamentals to value based procurement

VABPROand fundamentals to value-based procurement

2014-11-20

Agenda and introduction

Agenda

2 Introduction

3 Case presentations and discussion

1 Program

INTRODUCTION

4

A small portion of the population represents the majority of costs in social and healthcare

Individuals with extensive

social care and health

care 62%

Individuals with extensive

health care and no social

care 38%

% of expenses Segment Comissioner

10% of all inhabitants represent 80% of social

and healthcare expenditure - what are their

characteristics?

2%7%

10%

19%

4%6%

18%

35%

Elderly care

Psychiatric care

Institutional care for adolescents

Disabled children

Somatic disease, non-chronic, exkl elderly

Chronic disease, exkl elderly

Elderly with no elderly care

Övrigt**

Elderly care

Psychiatric care

Institutional care for adolescents

Disabled children

Somatic disease, non-chronic, exkl elderly

Chronic disease, excl elderly

Elderly with no elderly care

Other

5

Age/Time

Accu

mu

late

dso

cia

l a

nd

he

alth

care

co

sts

(illu

str

ative

)Financing social and healthcare is a gigantic challengeIllustrative example of accumulated social and healthcare costs over time/age

6

Age/Time

Accu

mu

late

dso

cia

l a

nd

he

alth

care

co

sts

(illu

str

ative

)

Example elderly care –

”compressed morbitity”

Lowering output costs is not sufficient to tackle cost challenge

7

Time

Nee

dfo

r so

cia

l a

nd

he

alth

ca

re

How to align

objectives?

A small portion of the population represents the majority of costs in social and healthcare

Provider

incentives

Improved quality of life and

service as well as lowered costs

8

What are the implications for external service providers in social and health care in a world of scarce resources?

Current

To

tal so

cia

l a

nd

he

alth

care

exp

en

diture

X

Market growth through total cost

increase is not an option

Innovative service providers benefit

from social and healthcare system

optimisation

= External service provider market

= Other expenses

Alternative development A Alternative development B

The VABPRO ambition is to harness value in social and healthcare services and stimulate innovativeness through value based procurement

9

Resources Production Output Outcome Value

Value-based procurement

10

Resources Production Output Outcome Value

Procurement today

VABRO ambition

From output to value/outcome. How come it’s such a large step?

11

Output is rarely 100% alignedwith outcome and value• There may be exceptions, e.g.

emergency departments

Intrinsic challenges related to reimbursement based on outcome/value• Organisational boundaries• Definition of outcome and value is

difficult• Analytically challenging• Monitoring difficulty

Outcome and value is the result of co-

creation with the client or patient

• E.g. smoking cessation

• To what extent can the provider actually

affect outcome and quality vs. the client or

patient him- or herself

• Risk för client/patient selection?

Causality

• Can the provider realistically affect outcome or

value and to what extent?

• To what extent is the outcome or value a result of

measures taken by the provider as opposed to

other providers or external factors (in addition to

client or patient co-creation)?

• Can the degree of causality be quantified?

The carrot and the stick• ”Put your money where your

mouth is”• Is it possible to quantify risk

and return

Identifying the actual challenge

• Lack of information may be a

factor (i.e. what is the actual

state of outcome and value)Output

Outcome

Value

12

…how have we chosen to interpreted these in the VABPRO - context

There are fundamental differencesbetween Outcome and Value• To what extent can providers be

reimbursed for achieving outcome(e.g. evidence based medicine) without generating perceived valueby the client or patient

Outcome is ”controllable” to a

higher externt

• Value is perceived by the client and

is therefore subject to subjective

valuation

It’s a philosophical (and political) question:• Who is to evaluate the result?• To what extent do we ”trust”

the individual (e.g. personal budget)?

Documentation and monitoringof Outcome and Value areinherently different• Different methods and

methodologies

Outcome Value

Outcome and value – is there a difference…

VABPRO seeks to promote such value through user-driven service concept design and innovative procurement process

design – a foundation for this is obtained through jointly agreed outcome and value metrics as well as reimbursement

models that drive improvement in the service delivery.

Outcome refers to ”objective”

quality, while Value reflects

”subjective” quality as perceived by

the individual

• However, defining objective quality is

not straightforward

• The financier’s definition of outcome

is likely to dominate (and may vary)

Value as defined in VABPRO

13

VABPRO

OutcomeOjective valueComissioner perspective

ValueSubjective value

Individual perspective

Value creationIncentives for creating value in service

Value metrics

Definition of value

Dynamics in value creation

14Source: xxx, yyy

Incentives tighed to

value metrics

Value based

reimbursement

Value enhancing

provider behavior

Vabpro

Comissioner

Provider

VABPRO

VABPRO

Individual

Empirical evidence

15

CASE EXAMPLES

UK: Reablement US: Accountable Care Organisations

There are three characteristics of an ACO:

1. The organization is led by health care providers and has a

strong element of primary care. Healthcare providers in the

organization are jointly responsible for the total health care

cost and quality of care for a well-defined population.

2. The reimbursement model is linked to quality improvements

and cost reductions for the defined population. If cost

savings are achieved (compared to predicted costs) the

ACO may receive a financial bonus.

3. The organization makes use of reliable and progressively

more sophisticated quality measurements to ensure that the

savings are achieved by better coordination of care and

prevention. The financial bonus are linked to the fulfillment

of the quality measurements.

The Affordable Care Act includes provisions for the

implementation of ACOs. Three pilot programs have been

initiated.

There are some evidence suggesting that ACOs reduce costs,

epically for patients with high and complex care need.

Results from the pilots suggest that clinical quality is improved

by ACOs.

Reablement has been adopted nationwide in the UK for the last

decade.

There are a number of definitions of Reablement:

• Support for people with poor physical or mental health or a

disability to help them live as independently as possible by

learning or relearning the skills necessary for daily living.

• An approach or a philosophy within homecare services –

one which helps people “do things for themselves, rather

than having things done for them”.

Reablement is generally designed to help people learn or

relearn the skills necessary for daily living which may have

been lost through deterioration in health and/or increased

support needs. A focus on regaining physical ability is central,

as is active reassessment.

Reablement improves outcomes, particularly in terms of

restoring people’s ability to perform usual activities and

improving their perceived quality of life. Reablement has been

found to achieve cost savings through reducing or removing the

need for ongoing support via traditional home care. However,

there is currently little research on or evidence to suggest that it

reduces health care costs.

Methodology

16

Definition of the service

Definition of target group(s)

Definition of outcome (objective) and value (subjective)

Definition of value metrics

Securing monitoring and evaluation mechanism

Design of Value-based reimbursement model

Design of Value-based procurement model

Identification of joint interface

User perceptions from Swedish elderly care…

…as a driver for identifying the relevant focus of a service

Källa: Webbkollen, 2013

Does the individual feel safe in

his/hers current living environment?Safety at home

For elderly, it is important that someone

has comprehensive knowledge and

responsibility of the elderlys’ care

contacts

Comprehensive

responsibility

The elderly needs support in adjusting

to changing levels of function in order

to maintain independence

Increased level of

independence 47%

37%

57%

10%

17%

13%

43%

45%

30%

Var du med och planerade dinhemgång från sjukhuset?

Fick du någon information omvad som planerats när du åkte

hem?

Visste du till vem du skullevända dig med eventuella

frågor?

Yes Don't know No

Do you know who to turn to in case

of unsafety and questions related

to safety?

Did you receive any information

about what was planned when

returning from hospital?

Where you at any time involved in

planning the discharge from

hospital?

User perspectives on functionaly of elderly care What is like in reality? *

Step 1. Identification of the

segments and their characteristics

Analytically driven understanding of characteristics...

18

…as a mean of definiting the target group and relevant service

Step 2. Identifying “value-drivers”

for specific segments and relevant

indicators

Step 3. Service design aligned with

segment needs and to promote

value (incentives connected to metrics)

Drug abuseAlcohol abuse

Somatic illness Mental illness

[illustrative]

1 2 3

4 5 6

7 8 9

10 11 12

1

2

3

4

5

6

7

8

9

11

12

[illustrative]

1

3

7

9

24

5

6

8

1011

12

[illustrative]

MetricsValue

drivers

Health and social care analysis:

Approaching outcome and value…

19

…approaching the problem at hand and quantifying benefits

Target group: Effect: Timing: Identification:

Primary prevention: The objective is to avoid and adverse event or effect

Secondary prevention: Acting upon early warningsignals

Tertiärprevention: Ease effect of realised adverseevent

Wide target group

Strictselection

Large: Focus on

preventing negative

spiral

Medium: Reactive

Insecure(often unquantifiable) Before

At

warning

signal

After the fact

Easy

Difficult

Medium

!

Direct

Selectedsymptoms

Methodology

20

Service

Target group(s)

Definition of Outcome (objective) and Value (subjective)

Value metrics

Monitoring and evaluation mechanism

Value-based reimbursement model

Value-based procurement model

Identified of joint interface (Outcome | Value)

Service provisioning

Result

Activites are designed to

maximize value

What do we want to achieve?

21

Purpose and objectives of VABPRO

Purpose and objectives

Procurement that is

user-driven based

on real needs

Procurement that

delivers better

quality services

and patient

satisfaction

Procurement that is

problem solving in co-

creation with the

suppliers

Procurement

that creates

over all system

level value

• The main objective is to support and develop procurement

that creates over all system level value

A B

C

Different steps with different purposes

22

Purpose of VABPRO

Service

Target group(s)

Definition of Outcome (objective) and Value (subjective)

Value metrics

Monitoring and evaluation mechanism

Value-based reimbursement model

Value-based procurement model

Identified of joint interface (Outcome | Value)

Service provisioning

Result

Activites are designed to

maximize value

Procurement model does not micro-manage how services areprovided, thereby encouraingproblem-solving and innovation among service providers

C

User driven throughincreased focus on usercharacteristics, problems and needs

A

Reimbursement modeldesign to promote the delivery ofhigher quality serives and ensuring individual satisfactionensuring improved outcome and value

B

Challenges

23

Purpose of VABPRO

Service

Target group(s)

Definition of Outcome (objective) and Value (subjective)

Value metrics

Monitoring and evaluation mechanism

Value-based reimbursement model

Value-based procurement model

Identified of joint interface (Outcome | Value)

Service provisioning

Result

Challenge: Defining the new

services/concepts:

• User-focused, analytically driven

• Handling organisational boundaries

(causality and power), profit-sharing

• Potential legal or other system level

barriers

Challenge: Defining the new

services/concepts:

• User-focused, analytically driven

• Handling organisational boundaries

(causality and power), profit-sharing

• Potential legal or other system level

barriers

Challenges: Competence and Data

• Knowledge and resources to make use of, construct, manage and develop further in practice Values based practices – in cases where new

services are produced internally in an organization or for the purpose of procuring these from suppliers on the market

• Availability of necessary data and data processing tools / capabilities for establishing the base line and evaluating outcomes

24

Thank you!