ELIZABETH TEISBERG PhD, Executive Director, Value Institute for Health and Care, Dell Medical School and McCombs School of Business, The University of Texas at Austin
SCOTT WALLACE, JD, MBA, Managing Director, Value Institute for Health and Care
SARAH O’HARA, MPH Course and Content Specialist, Value Institute for Health and Care
What is value in healthcare? What do organisations mean by value?
While reducing unnecessary costs is important,
Value-based healthcare has become a common
cost reduction alone won’t solve the problems
phrase. Throughout Australia and around the
facing healthcare. If care is ineffective at
world, healthcare organisations routinely proclaim
improving health, simply paying less for it may
that ‘value creation’ is a primary aspiration.
reduce wasteful spending, but doesn’t create
But what do these organisations mean by value? The technical definition is that value in healthcare is the improvement in patient health outcomes
value. The focus of reform must be to improve health outcomes. In that same vein, value differs from quality
for the cost of achieving those outcomes.
improvement. Quality tends to focus on improving
The healthcare system creates value when
processes, some but not all of which improve
it provides people with better health for an
outcomes. Handwashing compliance, for instance,
equivalent or lower amount of money.
is a common hospital quality indicator, but it
Value is often confused with cost reduction.
creates value only if it reduces healthcare-acquired infections.
The Health Advocate • JUNE 2019