Value vs Cost in the NHS The unprecedented difficulty that healthcare organisations experienced in maintaining essential equipment supplies during the Covid-19 pandemic instantly shone a spotlight on the value of health technology, as well as the need for agile specialist suppliers with the ability to rapidly adjust to meet this demand.
Gwyn Tudor Lifescience Industry Executive Editor For those of us who are closer to the medical technology sector, the desire to move to more value-based selection of products and suppliers is a mature refrain. Demographic drivers push healthcare costs ever upwards. The World Health Organisation notes that between 2015 and 2050, the proportion of the world’s population over 60 years old will nearly double from 12 per cent to 22 per cent. This will increase demands on healthcare systems. Common conditions in older age include hearing loss, deteriorating eyesight, back and neck pain, osteoarthritis, heart disease, type 2 diabetes, depression and dementia. Meanwhile obesity, an underlying cause or contributing factor for many diseases, has nearly tripled since 1975. These drivers go some way to explaining why total current healthcare expenditure in the UK accounts for 10 per cent of gross domestic product, compared with just 6.9 per cent in 1997.
Value
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Conversely, healthcare also has the ability to drive economic growth. The UK life science sector sector, comprising of medical technology, diagnostics, pharmaceuticals and digital health, generates over £80bn in annual turnover for the UK and employs over a quarter of a million people. The UK has a long-established world-leading role in medical research, and the NHS is a trusted healthcare brand recognised across the globe.
A whole system approach To meet the demands of our changing population, to address the challenge of rising healthcare costs, and to grasp the opportunities presented by new research and technology advances, a whole system approach is needed. Reduction in product costs (which typically represent just 10-15 per cent of procedure costs) will not address the big challenges that society is facing.
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Cost of Delivery
Value-Based Healthcare is defined by the Centre for Evidence-Based Medicine at the University of Oxford as “the equitable, sustainable and transparent use of available resources to achieve better outcomes and experiences for every person”. Value-Based Healthcare addresses the wider definition of value of a procedure, rather than focusing simply on the cost.
Value-Based Procurement An essential part of realising Value-Based Healthcare is Value-Based Procurement. The Value in Health team at NHS Wales defines Value-Based Procurement as “assessing the value and measuring what matters, using outcome divided by cost, and placing clinical and patient reported outcomes at the heart of the procurement decision making process”. NHS Supply Chain, who manage the sourcing, delivery and supply of healthcare products, services for healthcare organisations across England and Wales, explain that “Value-Based Procurement is an approach that delivers tangible, measurable financial benefit to the health system over and above a reduction in purchase price; and/or a tangible and measurable, improved patient outcome derived through the process of procurement.” Expressed as an equation, value looks simple to define. The problem, however, is understanding which outcomes are most important to us as a society and how we measure these outcomes. Also, what costs should be considered – product cost, procedure cost, whole life cost? And cost to whom – to the patient, to the healthcare provider, or to the economy and society as whole?
