Shifting Focus from Inputs to Outcomes: Towards a Value-Based Healthcare System in India

The Indian healthcare industry is at the cusp of an imperative shift, fuelled by growing talks about transparency, affordability, and quality. The recent debate surrounding the issue of pricing and reporting standards in the healthcare delivery market is a sign of this. Spurred partly by a directive of the Supreme Court  to  states to evolve a pricing policy that safeguards citizens’ right to health while at the same time promoting investment and market entry for private players, these talks are setting the ground for a more organised healthcare system. Concurrent efforts by the Bureau of Indian Standards (BIS) to prepare standardisation in billing items equally highlight the drive towards increased transparency. These are certainly welcome changes, especially for patients who carry a large share of healthcare expenses in the form of out-of-pocket payments. The aim is to introduce much-needed transparency into a system that has tended to be seen as opaque.

Yet, the journey to standardisation and transparency is not without its challenges.

The Pitfalls of Input-Based Comparisons in Healthcare

One often contentious issue relates to the possible comparison of doctors’ charges. For example, a comparison between the charges of a surgeon newly out of medical school and those of a surgeon with twenty years’ experience is unjustifiable. However, a person who does not have the data about each doctor and specific inputs would just compare surgeon charges. Inputs like experience result in better outcomes and that is why they attract premium, but currently we just assume this. Does this mean that two batch mates who graduated at the same time with same degree should charge exactly the same price for each procedure/service? It does not make much sense, as quality of experience is an input, not just number of years from graduation. So, better to move to outcomes, and differentiate prices based on them. The same holds for room rate differences across various clinics or differences in the cost of diagnostics. These are commonly explained as resulting from the inputs employed by the healthcare provider.

However, from the patient’s perspective, the primary aim of seeking medical services is to get cured and resume their previous way of life with enhanced or at least preserved quality of life.. Despite this, the underlying logic of the private healthcare market has tended to associate greater costs with ‘inputs’ that are seen to lead to improved quality. This involves arguments that better infrastructure, facilities, and advanced technology are critical components that enable patients to heal well or quickly. Although this argument has a valid foundation, it is concerned mainly with inputs and processes rather than the outcome.

This focus on inputs and processes brought about the ascendancy of quality accreditations, e.g., that offered by the National Accreditation Board for Hospitals & Healthcare Providers (NABH) or the Joint Commission International (JCI). Large private hospitals have gone out of their way to seek and acquire these marks. These accreditations are generally based on compliance with self-established systems and processes. A very important question then is: Does gaining accreditation based on these systems and processes really lead to improved health outcomes for patients always? Logically, one would think it would, but without strict measurement and data, it is an assumption; and there is some evidence.

In the continuing push for standardisation and putting healthcare information out there to be dissected, the one thing that would truly account for variation in costs at both the physician and hospital levels would be the health outcomes they reliably produce. The question then is: Does that added experience of an operating surgeon or access to state-of-the-art amenities really lead to a quantifiable, incremental advance in patient results that can warrant a premium price?

Reimagining Healthcare: Shifting the Focus to Outcomes

Thus, the natural follow-up to the development of India’s healthcare establishment has to be declaring the significance of facilities and infrastructure to outcomes in health. More crucially, it should be measuring the outcomes in health that are created by the entire medical staff, including doctors, nurses, paramedical personnel, and support staff. This changed focus implies that comparison of the absolute cost of different healthcare arrangements is not the most useful measure to judge by. Rather, the assessment must be based on the cost per health outcome produced. This is the measure that will enable one to guide the overall health system towards genuine value-based healthcare.

Adopting a value-based system, where compensation or assessment is tied to the health outcomes, is a dramatic paradigm shift from existing volume-based or input-based systems. It rewards efficiency, quality, and above all, patient well-being, more closely aligning the interests of providers and patients.

Although the idea of moving towards a state where “price per health outcome” becomes the common metric is attractive and desirable, it is not without its methodological and practical issues. Defining and, measuring health outcomes for a wide range of health conditions, patient groups, and healthcare settings is not an easy task. Outcomes may vary from mortality and complication rates to functional recovery, quality of life measures, and patient satisfaction. Creating universally agreed-upon, risk-adjusted outcome measures for certain procedures or conditions necessitates huge effort and cooperation between medical professionals, statisticians, and policymakers. Additionally, gathering credible, granular outcome data uniformly across a huge and diverse healthcare environment such as that of India poses logistical challenges.

Within the healthcare system, healthcare provisioning, pharmaceuticals, and medical devices all play complementary role. The latter two have been subjected to various cost-benefit analysis and regulated well by various organizations like USFDA (USA), EMA (EU), NICE (UK) and CDSCO (India). However, there are few examples and pilots for using outcomes for the provisioning of the care. Sweden and the UK are the two systems that come close to the ideal value-based healthcare systems. These systems moved to value-based mainly for the efficiency in the late part of the development of the system. However, for emerging countries these systems would be guideposts and adopting to the outcomes first culture lead to more effective healthcare system.

Building a Value-Based Healthcare Ecosystem in India

While there are challenges ahead, the healthcare system has to start somewhere. There have already been some notable efforts started under initiatives such as the Pradhan Mantri Jan Arogya Yojana (PMJAY) to tie payments to specific quality measures and outcomes, though the move to a complete value-based model is in its early stages.

To fully drive the system to the next level, especially in the prevailing private healthcare arena, it is critical that private healthcare providers take up the baton. Their active engagement is needed for creating and putting in place outcome measurement systems. This cannot be a one-way effort; it needs to be the concerted effort of all various stakeholders in the healthcare sphere. Providers need to spend on systems and training to track and report outcomes. Health insurers have an important role of developing payment models that incentivise better outcomes. Digital health players need to help create the infrastructure for data capture, analysis, and reporting. And, policymakers need to put in place the regulatory framework necessary to make smooth transition of the system. The regulation in healthcare has not been very easy in India. Consider the case of Clinical Establishment Act, 2010; it is yet to be adopted by 15 states. The heterogeneity in terms of resources, and public-private mix across states would further complicate the regulation related to transparency of outcomes. However, the ABDM and increasing insurance penetration may help. A good tight implementation of ABHA and EHR/EMR may result in ability of centralized mechanism of outcomes data collection. PMJAY, as the government is involved on the payor side, may influence this transition more efficiently and effectively, by putting incentives and disincentives. Instead of mandating this, a payment system that incentivizes this may help.

The payoffs to getting this transition right are enormous, especially for the patient. Someday soon, each patient or their families deciding whether to go to one doctor or hospital over another should have access to precise, procedure-level health outcomes information on various providers.

Not only would it enhance trust within the industry, but also make healthy competition amongst providers on the grounds of proven value, which would lead towards improving quality as well as impact costs.

Conclusion: Making Health Outcomes the New Currency of Care

Instituting a system that is based on “price per health outcome” is a future vision that requires persistent effort, investment, and cooperation. It calls for changing the culture within healthcare institutions with a focus on data collection, analysis, and ongoing improvement with an outcomes-driven approach. It requires standardised reporting mechanisms and definitions that are equal and comparable and may include provision for the complexity of patient illnesses (risk adjustment).

In addition, public policy ramifications are enormous. Policymakers must grapple with how to require or encourage outcome reporting, how to assure data accuracy and integrity, and how to render this complicated information accessible and comprehensible to the typical citizen. The government’s role as facilitator, standard setter, and perhaps even buyer of value (in public insurance programmes) is essential.

Attaining the patient-centric value based healthcare system is a big challenge, but active cooperation from providers, payers, digital health firms, and policymakers may make it a reality. With a focus on measuring and transparency of health results, India’s healthcare system will be able to empower patients, propel true quality improvement, and create a more accountable and value-based future.