For as long as I can remember, value-based healthcare has been the talk of the medtech industry, and for good reason: Who can argue with efforts to improve patient outcomes at a lower cost? With such virtuous and unassailable aims, it’s the irresistible force that dominated strategies in the last decade.
The industry has had a good run of value-based healthcare wins, including negotiating risk-based contracts on heart failure drugs and direct contracts with payers on insulin pumps with performance measured by HBA1C improvements. We saw some guarantees around minimizing mistakes with surgical sponges and payments based on infection rates. And certainly we’ve seen an increase in how the industry invests in evidence generation and health economics.
But if we’re speaking honestly, I always felt it was the exception rather than the rule to have explicit inclusion of some elements of value-based healthcare. I could give nice examples, but it would include the same few cases—I can’t point to a new standard of operating. I used to think that the full transition to value-based care was just around the corner, but now I’m not so sure.
Have a look at shareholder communications these days and you’ll notice something peculiar: People aren’t talking about value-based care all that much right now. Most investor presentations are overrun with exciting innovations, and the most recent acquisitions have an investment thesis of a valuable portfolio or substantial structural savings. In fact, the tuck-in acquisition is by far the dominant acquisition strategy right now because of the addition’s impact on the acquirer’s portfolio.
To be clear, I don’t think that it’s a coordinated conspiracy, and I’m not expecting to find a nefarious investor relations firm masterminding the communication strategy shift. What I think that we’re seeing is the realization that value-based healthcare was nice—is nice—in theory. It’s still the aim, but it isn’t moving stock prices. For now, the industry wants to hear about a promising portfolio and a string of interesting products.
This might be controversial—I frequently get myself into trouble—but I want to acknowledge that I think this is a temporary state of affairs. The appeal of value-based healthcare isn’t gone. In fact, all of the rapidly accelerating trends in device registries, outcomes measurement, universal patient records, wearables, genomic testing and tracking will eventually lead to an extremely rich catalog of costs and outcomes that will power a return to value-based healthcare. When we can characterize a patient pre-intervention, quantify the parameters of an intervention and measure the outcome, value-based healthcare will again be within our reach. The practical problems that plague the delivery model will fall away as the data collection and infrastructure capabilities eventually catch up with 2019.
Don’t despair if your company doesn’t yet have much to show for all of its value-based healthcare efforts, especially when you consider the high expense of many of the resources that it gobbles up. Value-based healthcare will eventually make its irrefutable return to the stage. In the meantime, we’ll need to wait for the hype to work its way through the system, and for data and measurement to catch up with the current state. Value-based healthcare isn’t dead, it’s just taking a little nap.
I recently had a chance to explore a few of these notions—and more—during a discussion-turned-podcast with Ashley Yeo, healthcare editor of In Vivo, in the publication’s offices near St. Paul’s Cathedral in London. The far-reaching conversation also led me to talk about short-term threats and long-term opportunities for medtech companies. I invite you to listen to the podcast and share your thoughts.