This blog is part 7 of a series on MEAT Value-Based Procurement, an initiative that advocates a shift from price-based procurement towards value-based procurement in healthcare. It does so by defining a Best Price Quality Ratio method within the Most Economically Advantageous Tendering (MEAT) framework put forward in the European Public Procurement directive. Read part 1, part 2, part 3, part 4 and part 5 and part 6.
Our health systems need reforms to maintain universal health coverage and, given the economic and demographic pressures we face, Europe cannot afford its citizens to be in poor health.
This will require new thinking about the economic value of health for individuals, families and society (health as an economic good) in addition to the economics (the cost-efficiency) of healthcare systems. Instead of focusing on the costs of healthcare, we must consider what is delivered.
The full value of investing in health and quality healthcare can be realised by focussing on health outcomes complemented and enhanced by the economic value offered by being in good health and having cost-efficient health systems. This value-oriented approach can be implemented when purchasing health technologies. It is already seen in some modern procurement procedures resulting in the highest economic value in addition to best health outcomes. These most economically-advantageous tenders (MEAT) can deliver optimal value to society.
To make informed decisions about what constitutes value, we need to consider the full value that health investments bring – not just the outcomes for patients or for hospitals, but the full impact these interventions can bring to society by keeping people in good health.
The real economic consequences of being in a state of ill-health are not solely related to the direct costs of health and care, but include wider socio-economic consequences and informal care needs which are of equal importance.
Diabetes is a case in point. A recent study by the Danish Diabetes Association shows that the total cost to Danish society of diabetes type II is €4.3 billion annually. Of this, €1.8m billion is directly linked to loss of productivity as diabetes patients have higher unemployment rates, more absenteeism and earlier retirement than other sections of the population.
This and many other examples points to the need for a wider definition of the importance of health, namely by incorporating the broader socio-economic consequences of health – from the perspective of societies, health systems and patients.
Some progress in the thinking about health policy has been made by focussing on outcomes for patients, but to really identify the value of healthcare, outcomes must be measured in relation to cost. And one step more is necessary, namely to include the broader socio-economic value of being in good health.
Agreement on how to measure outcomes has already proven to be difficult, and identifying the exact socio-economic consequences will not be easy. But that does not mean that we should not try to be pragmatic and take these factors into consideration when purchasing health care and technology. As the diabetes example shows, economic outcomes at all levels should be added to the equation.
We know that the health system costs a lot. Yet it produces a lot of value. Let’s commit to new thinking that allows investment decisions to be guided by the wider economics of health and care.
The three components of economic value to guide investing in health and care
1.Reducing operational cost – gaining efficiency in healthcare delivery
Proper investments in healthcare should minimise unnecessary spending and waste. Cost-efficient solutions will further reduce expenditure.
2.Better socioeconomic outcomes – gaining social and economic capacity
Chronic diseases, including increased co-morbidities, are often linked to age, but are also proven to depend on socioeconomic status.Being in good health and socio-economic status will result in a significant increase in social and economic capacity, contributing to the value of investments.
3.Cost avoidance by preventing disease onset and progression; reduced need for informal care
Investing in health systems to prevent the onset of, and progression to, advanced stages of chronic disease, has significant economic benefits for the health system, patients and society. Advanced stages of disease require more informal care which can have a negative impact on the economy and social capacity.
The arguments in this blog post are further developed in a more comprehensive paper, which can be found here.