Value-Based Procurement: The New Imperative for Canada HSCN Conference May 10, 2016 Dr. Gabriela Prada Director, Health Innovation Policy The Conference Board of Canada prada@conferenceboard.ca 1
About The Conference Board of Canada Objective. Independent. Evidence-based. Three principles guide us: insights, understanding, impact. What we do: research, convening, education, and dialogue. 2
Total Health Expenditure, Percentage of GDP 12 10 8 6 Canada OECD 4 2 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: OECD 3
Canada s Health Performance 4
Correlation Between Health Spending and Ranking 5
Overall Rankings 6
Significant Outcome Variation Across Europe as well Outcome variation rate (multiple) 2x 4x 9x 18x 20x 36x variation in 30-day mortality rate from heart attack in US variation in bypass surgery mortality in the UK variation in complication rates from radical prostatectomies in the Netherlands variation in reoperation rates after hip surgery in Germany variation in mortality after colon cancer surgery in Sweden variation in capsule complications after cataract surgery in Sweden... and spiraling healthcare costs Sources: Medicare Hospital Compare, MINAP, Inspectie voor de Gezondheidszorg, Gemeinsamer Bundesausschuss, Svenska Kolorektalcancerregistret, Svenska Nationella Kataraktregistret, BCG analysis 7
Increasing Value of Health Care Delivery Outcome HC Value = Cost The Alzira Model in Spain: increased patient satisfaction by 20%, while costs decreased by 25% 8 8
VBHC is Expanding Quickly VBHC becoming increasingly important in academics......as well as on macroeconomic level across international organizations # of PubMed articles on Value-based healthcare 1 300 227 206 39% 200 298 Health outcomes a significant focus in HC policy Multiple related publications Financial support of OECD Quality indicator project 100 0 15 42 45 50 64 101 124 Strong focus on driving outcomes orientation Project defining outcomes standards Multiple reports published 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Policy advice largely focused on cost containments Historically faced criticism to negatively impact outcomes due to tight financing 9
VBP Brings VBHC into Practice Value-Based Health Care Value-Based Procurement HC Value = Outcome Cost Criteria for tender evaluation to explicitly include patient outcomes as well as total costs (price, life-cycle and total operating costs) Outcomes Societal Other benefits impacts Costs incl. care delivery Other benefits Outcomes beyond patients also to be included as secondary considerations Broader impact on society VBHC can t occur without VBP 10
What is VBP? Process that creates health care value by: Focusing on the needs of endusers Placing emphasis on overall system value rather than cost Engaging in problem solving and co-creation with suppliers Supporting the attainment of better health outcomes, improve system performance, and patient experience. 11
Traditional vs. VBP Focus on costs Volume-based Fragmented, episodic Retrospective Transactional Focus on value Outcomes-based Integrated, total cost Prospective Strategic 12
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VBP Toolkit Pre-Market Post-Market PCP Innovation Partnerships Procuring for Solutions Kinneir Dufort and Bristol Maid Medtronic Innovative Technologies Innovative Business Models 14
Designing a Health Solution 15
VBP Is Happening Today Assessment of total cost of care delivery Risk-sharing with suppliers when there is little evidence on outcomes Public/private collaboration for measuring outcomes Testing patient reported outcomes in tenders 16
Total Cost of Care Delivery TCOC: Unit Cost (price) x Resource Utilization (volume) / Defined Period of Time Stockholm County Council tendered for wound-care products Instead of pure price, a cost model incl. care delivery costs was used Suppliers had to demonstrate total costs for 3 different fictional patients Bidder with highest price won: presented strong evidence showing lowest overall cost 17
Testing Patient-Reported Outcomes South-Eastern Norway Regional Health Authority tendered for IV Catheters. Clinicians complaints led to modify the pure price model previously used. A test was performed during tendering and was determinant in the final selection. Patients were asked about pain levels when the IV cath were inserted through a standardized questionnaire. Bidder with the lowest cost did not win. 18
Dialogue and Negotiation in Tendering Key for enabling valuebased procurement Two types: Sequential (e.g., negotiable RFP) Consecutive (e.g., competitive dialogue) 19
Managing Risks Legislative and regulatory frameworks are not a barrier for VBP Project failures often come from failure to: Meet operational standards Stay within budgets Deliver on time Follow the process rules 20
Innovation Procurement in Ontario Office of the Chief Health Innovation Strategist AdvancingHealth (OCE) REACH (HTX) Innovation procurement demonstration projects Innovation procurement e-learning program 21
Closing Remarks VBHC can t be possible without VBP. Governments across the globe are setting expectations to embrace VBP. VBP requires a shift in mindset and a cultural change. There are funding opportunities to experiment with VBP in Ontario. Innovation is a core theme in health care transformation. Governments and the private sector need to step up. 22
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