The delivery of healthcare is undergoing widespread transformation. Recent NHS reforms have seen a refocus on patient choice as healthcare providers set out to expand community diagnostics hubs and improve appointment access. At the same time, a move away from Fee-For-Service models (FFS) in the US has given rise to Value-Based Care (VBC) models, one that prioritises patient outcomes over volume with a focus on quality, efficiency and cost-savings. This shift in funding mechanisms will not only impact treatment for patients, but prompt greater adoption of digital tools to support diagnostics, health monitoring and care coordination.
In light of these shifts, Yuval Yashiv, CEO at Thermology Health, explores what the shift from FFS to VBC payment models means for the delivery for healthcare more broadly, and what opportunities and barriers this presents for European MedTech.
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What has been the impact of the shift to value-based care for the global Medtech landscape?
To date, many healthcare systems, particularly in the U.S. and private sectors, have predominantly relied on an FFS model. Nevertheless, many publicly funded European healthcare systems use capitation or budget-based models
Under FFS, cost is determined by the number and type of services used, focusing on the treatment and services patients receive. By charging based on the supplied treatment, rather than outcome, this can create the incentive to schedule more appointments, tests and procedures than necessary in order to increase revenue, leading to an inefficient use of resources.
In contrast under value-based care, treatments are prescribed based on the need and expected outcome for the patient, rather than the cost of the services used. This approach can support healthcare providers in addressing rising capacity and cost pressures by prioritising the most effective care for patients, rather than the number of appointments and treatments carried out. Enabling better allocation of resources by incentivising efficiency, VBC frees up time for healthcare providers and, therefore, makes treatment available to more individuals.
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How important has this move been in the delivery of healthcare more broadly? What are the benefits for patients?
Matching outcome with funding creates a healthcare model that is more patient-focused, encouraging providers to allocate resources in order to deliver the greatest human benefit. FFS can sometimes incentivise treatment that is inefficient or ineffective as well as time consuming for patients, resulting in unnecessary tests and with it, stress for patients. Refocusing the incentive structures around needs and outcomes creates a more seamless experience, in addition to freeing up capacity to treat more patients.
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What are the opportunities for European Medtechs under this model? How can they ensure that they are in a position to take advantage?
Value-Based Care prioritises outcome-driven care, which includes preventative and home-based care, as well as more efficient hospital and outpatient services, and creates exciting opportunities for innovation and the development of digital, predictive and remote monitoring tools.
For example, by using remote monitoring for patients with chronic diseases, VBC becomes the preferred approach, as optimising resources, freeing up hospital space, and enhancing patient comfort are prioritised, offering the same level of care at home. Preventative care also promotes cost savings as it is far cheaper to monitor high-risk patients and intervene early than to treat their conditions after they escalate. For example, this could be at home monitoring to support the prevention of diabetic foot ulcers, reducing strain on hospital resources and improving patient outcome.
In contrast, FFS offers fewer opportunities to innovate in this space as the incentive structures don’t always support the business case for developing early diagnostic and preventative solutions.
By shifting to value-based care, healthcare providers are actively seeking cost-effective solutions that maintain or improve patient outcomes with fewer resources and minimal disruption. This move will accelerate advancements already taking place in remote monitoring and treatment, creating further opportunities for those innovating in the space.
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What role do you believe AI and predictive analytics will play in early diagnosis and chronic disease management under value-based care?
AI and predictive analytics have the potential to significantly reduce costs through more efficient use of resources. More importantly, as healthcare systems face growing demand, this will free up staff time to handle more challenging cases.
While we saw a shift towards monitoring chronic illnesses at home during the Covid pandemic, AI and predictive analytics will free up additional resources and improve welfare for patients through the creation of virtual wards. By increasing the monitoring of chronic illnesses within the community and using AI to predict which patients are at risk and need extra support, it will be possible to treat and manage conditions without the need for a hospital visit, vastly improving the allocation of resources.
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What are the main barriers healthcare providers are facing in their adoption of MedTech?
While there is growing enthusiasm amongst healthcare providers to innovate and adopt emerging technologies, several challenges are holding back widespread uptake:
Regulatory barriers
The healthcare industry is heavily regulated, meaning that any new solutions which providers adopt must demonstrate robust compliance with safety or efficacy requirements. While regulations are adapting to new healthcare technologies, some outdated policies and complex approval pathways still pose barriers to MedTech adoption.
Reimbursement structure
The funding model healthcare providers operate within directly influences how treatments are valued. As a result, providers must clearly demonstrate how new technologies deliver value over existing methods. This includes measuring and validating new technologies and demonstrating their advantages over existing methods and technologies.
Operational complexities
The need to operate securely and seamlessly is crucial. For community-based applications in particular such as remote patient monitoring, this can be a real challenge. Solutions must integrate with existing electronic data records to enable doctors to monitor changes remotely, while also feeding back into the mainstream hospital system.
Human resistance
Finally, cultural barriers pose a significant challenge as practitioners are accustomed to established processes and may be resistant to change. With doctors already overburdened, it is crucial to demonstrate how investing time and funding in new solutions can ultimately ease their workload, improve patient outcome or both. This is particularly important when introducing solutions into areas where a treatment or a test already exists, as there needs to be a clear benefit for practitioners or improvement in outcomes for patients.
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What trends do you foresee in preventative care technologies in the next five years?
The pandemic started a movement towards the use of wearable and telehealth technology to improve patient monitoring and diagnostics, and this is only going to gain momentum as strong use cases emerge and the benefits become increasingly apparent.
Healthcare providers are increasingly looking at remote patient monitoring as a solution to reduce pressures on hospitals and move to treatment in the community. As adoption grows and providers embrace new innovations, preventative care technologies will continue to advance, creating significant benefits for both patients and practitioners alike.
By Yuval Yashiv, CEO at Thermology Health