Benefits Strategy

Taking Action on Value: A Business Group on Health Viewpoint

Employers and their partners must continue to push for high-value care globally, which ultimately means great outcomes with a positive experience at an affordable cost.

December 16, 2024

What is value with regard to health care? Too often measures of value lack a patient and employer (as payer) view. The employer perspective on what determines value in health care must be considered. To address that gap, we broadly define value as follows:

Value equals quality plus outcomes plus patient experience divided by cost equation

This value equation includes key elements that appear in the definitions of “value” created by dozens of organizations worldwide. How organizations weigh these elements varies based on their priorities, opportunities and constraints. Notably, any definition of value for the employer-sponsored health and well-being landscape must include some aspect of cost, quality, outcomes and the patient experience.

All stakeholders must bear responsibility for moving toward delivering or enabling value-based care, especially with costs increasing faster than in the last 15 years around the world. Stakeholders include but are not limited to health plans, providers, public health systems in many countries and employers. Business Group on Health’s survey data show that employers use several strategies to enable high-quality care at an affordable price, most often implemented in partnership with intermediaries. Examples include high-performance networks, Centers of Excellence (COEs), advanced primary care, virtual care, international “captives” and other strategies that use provider payment arrangements that range from full capitation to fee-for-service and everything in between.

A presumption has been that there is a very narrow list of actions employers can take to drive value in health care, with some accusing employers of inaction because many have not taken up direct contracts with health care providers, and others saying there is little they can do outside the U.S. The reality is, however, is that most employers have spent decades focused on cost management and affordability, using multiple strategies, regardless of whether they have the resources or scale to contract directly with providers. Employers have also pushed their industry partners – including health plans, pharmacy, benefit managers, providers and other third-party vendors across the globe – to drive improvements in quality, insisting that they focus on improving patient outcomes and experience. Additionally, employers have led the way in holding partners accountable and implementing strategic approaches to drive innovation, transparency, quality and the well-being of the workforce, setting the employer market apart from others, including government-sponsored programs.

Driving Value Across the Globe

The need for improvements in health care value is not limited to the U.S. Everywhere around the globe, driving value means focusing health care strategy on what improves health and the efficient use of health care resources. It is imperative that employers and their partners use their many levers to drive better value in health care and well-being across the globe. The context for driving value will vary widely across countries, creating complexity for multinational employers seeking to improve outcomes for their employees and stem cost increases.

Still, much more can and should be done. More employers need to understand and promote value-based payment models and contracting arrangements that promote high-quality, cost-effective care. They must use their leverage to hold their vendor partners accountable, pushing them to move faster toward a system that rewards providers for delivering high-value care rather than for increasing utilization. And they must be more willing to cause some disruption in benefit design to drive plan members to high-value services and providers.

There are Many Paths to Value-based Care Regardless of Contracting Strategy 

Moving to outcomes-based contracting, where vendors’ or health care providers’ full reimbursements are predicated on meeting certain pre-defined health and cost goals, across health plans is critical. Under fee-for-service arrangements, financial risk for increasing health care costs is borne only by employers and their workforce, despite the significant control health plans, health care providers and others have over how and how often health care services are used. But achieving widespread adoption of outcomes-based contracting requires broad support and coordination across several health plans, government payers and others, which will take time that employers and patients do not have.

Nonetheless, employers have a tremendous opportunity to increase the value of care their plan members receive by steering them to providers already delivering high-value care, regardless of where they practice and how they are reimbursed.

Successful high-value care will include some or all of these elements:

Integrated mental health services across health care provider types; 
Proactive outreach to patients and coordination outside the medical visit;
Meaningful 24/7 access to care and/or provider team support; 
Workflows that enable evidence-based treatment as the default treatment; 
Data-driven referrals and coordination with other high-performing providers; 
Continuous improvement efforts to drive high performance on quality, outcomes and patient experience metrics; 
Personalization of care based on unique clinical needs and patient preferences that includes respecting and addressing their cultural, racial and social experience; and 
A strong foundation of primary care or, for specialty care providers, effective coordination with a patient’s primary care team.

Unfortunately, providers practicing high-value care are too hard to find for employers and their plan members, both in the U.S. and globally. Vendors working with employers to develop provider networks, programs and benefit design have to improve how they locate high-value providers and services for their employer clients and individual users. Having high-value alternatives “in network” alone is not enough; support tools for plan participants must make these high-value options the default option. 

Employers need to keep in mind that it’s not just brick-and-mortar providers delivering high-value care. Many providers deliver care virtually, and point solutions and other non-traditional providers are leaders in value-based care and contracting across the globe. Employers have a strong track record of contracting with and pushing for integration of these services within their health plan offerings, bolstered by performance guarantees akin to “shared-risk” payment arrangements. But these payment strategies often aren’t considered value-based purchasing because they aren’t associated with direct-contracting with brick-and-mortar providers. Employers must use a “value” lens when considering contracting with an entity that provides care, regardless of whether the care is delivered in-person, virtually, or some other modality.

Everyone Is Responsible for Driving Value in Health Care 

Driving meaningful, broad-scale value in health care and benefits is best achieved through partnerships. It is the responsibility of all stakeholders to improve value in health care. This includes employers, patients, health plans, PBMs, health care providers, innovators, governments, consulting firms, employee assistance programs, pharmaceutical manufacturers and others involved in paying for, delivering and managing health care services. Coordination between partners can be challenging, but that cannot be an excuse for inaction; all too often, disagreement on how to proceed leads to finger pointing and letting the perfect be the enemy of good steps that can be taken now. 

The Business Group’s Value-based Purchasing: 7 Calls to Action for Health Care Industry and Employers goes into great detail about several actions that key stakeholders must take to drive value in health care together, because it is incumbent on everyone to act.

Examples of steps that various stakeholders should take to advance value-based purchasing now include: 

Health plans leveraging their market power across payer types to drive value-based contracting more quickly;
Meaningful data-sharing across players to make comprehensive assessments of value and costs possible; and 
Seriously considering plan design, steerage and contracting, directly or via intermediaries, to push patients toward providers delivering high-value care and taking financial risk.

While there are innovative partners creating new opportunities for employers to contract for value-based care, there are also a number of available paths to value that don’t require new contracting. These include strategies like high-performance networks, COEs and companies that leverage data to identify high-value providers within broader PPO networks, all of which can be done with many vendors employers already work with. Effective implementation requires partnerships and can create disruption, but employers need to embrace these options. Hoping that broad networks with fee-for-service arrangements or public health systems across the world will stem cost increases or improve health outcomes isn’t a realistic approach or an effective long-term strategy. 

What We Measure Matters

Trillions of health care data points – clinical outcomes, claims, prices, patient surveys, public health and more – are held by employers, patients, providers, health plans, governments and others. Data is often disjointed, not meaningfully shared with employers and too overwhelming to be actionable. Employers are increasingly working with their partners to consider tools like AI to make large datasets actionable, but that effort takes time and investment of resources.

Employers also need an accurate measurement of the total cost of care (TCOC) to pay for value. Health care stakeholders must share data with employers and other vendors to give them a full picture of the impact of value-based contracting strategies. For example, comparisons of cost across networks and providers have traditionally been based on a percentage discount off a standard fee schedule. This approach, however, excludes quality and patient experience, key components of a value-based approach. Health plans, providers, consultants and other partners should consistently make data available to perform TCOC measurements so that decisions can be based on that information. Data on pharmacy spending also must be included, as it must be part of value-based contracting. Health care costs are increasingly being driven by drug costs, making it imperative to include pharmacy spending in TCOC calculations and value-based contracting. Without meaningful data sharing, it is extremely difficult for employers and their partners to drive value together.

Conclusion

Despite great variation the world over, ultimately patients and employers want the same basic results from health care: improved outcomes with a positive experience at an affordable cost. This is high-value care, and employers, with their partners, have a wide array of strategies to help patients obtain this kind of service. This has long been an area of focus for employers, but with costs rising faster than they have in at least a decade, the imperative to drive value in health care is even greater. How employers weigh the elements of value and seek to influence them will differ based on a number of factors, but above all else, employers need to act to drive value. The status quo is increasingly unaffordable for employers and their employees across the globe, and it’s not driving the health improvements we should expect.