Global Business School for Health


Can The Pandemic Accelerate The Adoption Of Value-Based Healthcare In Developing Nations?

31 October 2021

Joel Schamroth and David Walcott discuss the reasons why developing countries should embrace value-based healthcare.

A person's hands using a laptop next to a stethoscope

Of all the industries impacted by Covid-19, healthcare was the first. Custodians of the world’s healthcare services received a dose of forced introspection, faced with acknowledging the frailties of existing systems and the challenge of how best to redesign healthcare delivery. It has become clear that a return to the pre-pandemic status quo is neither possible nor desirable if we are to build the resilient, high-quality and equitable health systems of the future. 

Responding to healthcare crises in developing nations

Developing nations often have overburdened healthcare systems which tend to be poorly resourced in comparison with their high-income counterparts. Such systems tend to have suboptimal diagnostic and therapeutic capabilities, such as weaker laboratory infrastructure and fewer intensive care beds. In addition to comparatively limited capacity in the health system, low-and-middle-income-countries (LMICs) are often unable to deploy the necessary economic resources to support their ability to respond to major shocks. Few developing nations would be able to emulate China’s mobilization of resources, constructing hospitals in a matter of days in response to a national crisis.

When tenuous healthcare systems are strained – as occurs in a pandemic - the feral consumption of diagnostic and therapeutic resources can further destabilize national health systems. These health system risks can often exist within the context of wider public health challenges such as higher levels of overcrowded housing, underdeveloped sanitization infrastructure and poorly resourced infection control systems.

However, this pandemic has demonstrated that mature, developed health infrastructure is no guarantee of success in responding to this pandemic. Looking at the public health and health system response (rather than vaccination rollouts) some LMICs have fared poorly during the pandemic while others have responded with dynamism, innovation and purpose.

Innovations in Covid-19 testing in Senegal and Rwanda offer the potential to scale testing in greater numbers, while in Peru, a volunteer workforce of tens of thousands of young people mobilised to map the needs of almost half a million of Peru’s elderly and vulnerable at- risk population. In Kenya's Siaya County, thousands of community health workers were able to mount a highly effective response to Covid-19 in the region, enabled by digital technology. 

Covid-19 has invited reflection on how we deliver care, both in developed and developing nations. As health systems in emerging markets come under the spotlight, this pandemic may represent an opportunity to reflect, learn, and adopt new policy tools to build capacity and resilience.

The Case for Value-Based Healthcare

Value-Based Healthcare is characterized by a rational approach to the design of healthcare delivery, considering its fundamental inputs and outputs. In its simplest form, it involves the systematic measurement of health outcomes, rationalized against the costs involved in achieving these outcomes. In doing so, it addresses two major pitfalls currently afflicting modern healthcare delivery; (i) inadequate data collection for many health outcomes and (ii) an incomplete, inaccurate understanding of the true costs of healthcare delivery. 

By tackling these issues head on, VBHC aims to improve the quality and efficiency of the healthcare delivery ecosystem. It allows for swift identification of inefficiencies, helping to avoid spiralling costs, while also enabling providers keep their fingers on the pulse of systems to quickly recognize where they are producing suboptimal health outcomes, enabling rapid feedback-driven improvement and iteration of healthcare delivery. Key tenets of VBHC include designing care pathways around the patient journey and integrating care around specific conditions, emphasising preventative measures at each stage to both lower costs and improve outcomes. 

Crucially, reimbursement is linked to performance against the most important health outcomes, driving constant measuring and improving performance against these outcomes.  These include the outcomes that matter most to patients, such as patient experience. In these ways and more, VBHC aims to address the deficiencies, limitations and excesses of both (i) the ‘volume and profit’ approach and (ii) the access-above-all paradigm of many national healthcare care systems. 

VBHC - A paradigm for emerging markets?

This is of great importance because healthcare spending and costs in many emerging markets is increasing at a rapid rate. Simply replicating the high-cost, often inefficient models of care found in Europe and the US is something that policy-makers and providers in developing nations are keen to avoid, providing strong incentives to think outside-the box. 

Stakeholders in LMICs - including payors, providers and governments - are exploring the principles of value-based healthcare to address challenges in their healthcare systems. VBHC is becoming a strategic priority of policymakers in some regions and elements of VBHC - such as bundled payment models and improved outcome measurement - are beginning to emerge in unexpected spaces.

Thailand, historically a leader in medical tourism, has opted to prioritize the management of key chronic illnesses that threaten the broad welfare of its local population – hypertension and type 2 diabetes – and are exploring VBHC-driven solutions at the primary care level. VBHC principles underlie innovative healthcare models in parts of Brazil and Mexico, where providers are incentivized care for high-risk groups or provide holistic, integrated care for diabetics; in each case, longitudinal accountability for costs, outcome measurement and prevention are paramount to produce better health outcomes for their populations.

Private sector players are also helping to drive the global VBHC agenda, directly engaging payors and providers in Chile, Colombia and Brazil in projects designed to reduce costs and improve outcomes in cardiac care and diabetes. Innovative start-ups are also working to deliver key pieces of the VBHC puzzle. The variety and versatility of the examples presented here suggest that VBHC is a compelling idea with the potential to take root in a broad range of different contexts and nations.

Value-based investments in resilient systems

VBHC requires up-front investment to improve cost measurement, outcome collection and service redesign. Despite these upfront costs, enacting the key tenets of VBHC are within the financial reach of providers and policy-markers in low-income settings. Designed to optimize the health outcomes per every $1 spent on healthcare, value-based care offers great potential to deliver impact in resource-limited settings given its focus on optimising outcomes and efficiency-driven savings. 

In 2019, the USAID report titled ‘Leapfrog to Value’ provided detailed theory and guidance for how developing nations can adopt the core pillars of VBHC. At the core of this are (i) measurement of both outcomes and costs (ii) constant healthcare improvement and performance using outcomes data and (iii) reimbursement linked to better outcomes. Covid-19 has accelerated many trends, and there is no reason to think the adoption of VBHC in emerging markets cannot be one of them.

Despite the infrastructural requirements of VBHC – IT systems, disease registries, and integrated health systems – which are often lagging in LMICs, innovative solutions may present leapfrogging opportunities to drive rapid data collection at-scale. In fact, the absence of deeply-ingrained hospital networks and legacy IT structures gives emerging regions the white-space to develop innovative approaches to quickly mobilize with minimal friction. 

The high levels of mobile penetration in some regions represent additional opportunities for rapid, expedient health data collection and integration. Kenya’s rapid adoption of mobile money with MPesa represented a classic leapfrogging opportunity in mobile financial services that can serve as an exemplar for healthcare. As traditional cellular phones are replaced by smartphones in developing markets, this will expand the capacity both for sophisticated data collection and healthcare delivery directly to patients. Here too, Covid-19 has been an accelerator for the adoption of telemedicine and digital healthcare in many countries.

Perhaps most importantly, alongside the potential to drive system-level improvements in care-delivery and sustainable economic models for providers, is the vital tailwind of social impact. The combination of superior health outcomes, lower costs and accessible care means measurable positive social and economic impact. This means that VBHC in emerging markets is a highly compelling opportunity and a key piece of the puzzle for health system development. As Covid-19 encourages all nations to reflect on our healthcare models and seek to optimize the line of best fit between quality of care, access and cost, let us remember that we must indeed add value.

Headshot of Joel Schamroth

Joel Schamroth - Medical Doctor (MBBS, MRCP) and UCL alumnus, now at GSK. (All views expressed by Joel in this article are his own.)

David Walcott headshot

David Walcott - Medical Doctor (MD., Ph.D., MSc.) and Founder and Director of Novamed.