Quality over quantity: why the time has come for 'value based health care'

This transcript has been generated using speech recognition software and may contain errors. Please check its accuracy against the audio.

Catherine MacLean, Chief Value Medical Officer, Hospital for Special Surgery (HSS), New York : About a third of health care in the U.S. is wasteful. Thirty percent of $5 trillion - that is a huge amount of money.

Robin Pomeroy, host Radio Davos: Welcome to Radio Davos, the podcast from the World Economic Forum that looks at the biggest challenges and how we might solve them. This week: as populations get older, the cost of health care increases - how can health systems around the world cope? Part of the answer might be something called value based health care

Catherine MacLean: Higher patient satisfaction, better outcomes, and less cost of care.

Robin Pomeroy: That is the promise of value based health care - but what is it? What would it look like for us patients, and for health care providers? We hear from a doctor at a hospital in New York, and from someone who has been advocating for value based health care for years, who explains why a seemingly obvious shift - concentrating on complete patient outcomes, rather than individual medical procedures - is proving so hard to implement.

Meni Styliadou, Founder and Co-lead of the Health Outcomes Observatory and VP Health Data Partnerships, Data Science Institute, Takeda: It needs a crisis because such a big change often requires some type of crisis, or some type of huge innovation. In the case of health care, I actually believe that we are approaching this tipping point because we have a bit of both.

Robin Pomeroy: Subscribe to Radio Davos wherever you get your podcasts, or visit wef.ch/podcasts where you will also find our sister podcasts, Meet the Leader and Agenda Dialogues.

I’m Robin Pomeroy at the World Economic Forum, and with this look at value based health care...

Meni Styliadou: It makes the conversation better and it creates true patient empowerment.

Robin Pomeroy: This is Radio Davos

Health care - we all need it and it’s one of the most expensive things in pretty much any country - requiring vast investments, no matter what kind of system is in place. And as populations age, the health bill is just going to increase.

So what if there was a way to save money on health care while, at the same time, improving outcomes for patients? That's the promise of something called value based health care - a notion that has been around for a couple of decades, where patient outcomes are monitored and health care services are funded on the basis of quality care, rather than the quantity of procedures.

To explore the idea of shifting from volume-based to value-based healthcare, the World Economic Forum has brought together public and private sector players in the Global Coalition for Value in Healthcare and is now launching the Digital Healthcare Transformation Initiative which aims to improve outcomes through more efficient and effective mechanisms.

Later on this episode we speak to a doctor in New York working on this, she is a Chief Value Medical Officer.

But first, I spoke to Meni Styliadou, she's the founder & co-lead of the Health Outcomes Observatory and Vice President Health Data Partnerships, Data Science Institute at the pharmaceuticals company Takeda. Meni has been advocating for value based health care for years since she first heard of the idea which struck her as a no-brainer. I started by asking Meni Styliadou, how, in one sentence, she would define value based health care.

Meni Styliadou: It's 'let's get health care to focus on results and not on activities'. It's as simple as that, really.

Robin Pomeroy: his is a system of health care that would try to get the best results and focus less on each individual prescription or operation. How widespread is it? Does it exist already, value based health care? And what does it look like in real life? Could you give us a before and after? Here's what a patient would experience not in value based health care, which is probably what most health systems are. And this is what a patient would experience with the same diagnosis under value based health care.

Meni Styliadou: I think the fundamental difference in what a patient would experience is that if we were to live in a world of value based health care, a patient would never have to ask themselves questions as to 'was that needed? Was this doctor really interested in giving me the best possible care or did he do it or did she do it because they just wanted yet another treatment for some more revenue?'

For some countries, the countries where the health care professionals are paid currently on the basis of the services they provide, the fee for service model, as we call it, which is very prevalent in lots of big parts of the world, in the U.S. and several European countries as well.

Now there are these other countries, the countries where they follow the the NHS model of the UK, where the doctors are not being paid because of the service they provide, but they have a fixed salary, more or less. But then the patient may not worry, 'are they doing this because they're going to go get more money out of me?' But in that case, the patients' worry 'will they have any time for me because they have no incentives to see me at all - they have a fixed salary and that's it'.

So in an outcome-based world, the patient would feel more like we feel in other parts of society, as a client, as a customer, but as a customer who knows that the service providers' incentives are aligned to the patient's incentives.

So that's in a nutshell what this is about, an alignment of incentives between health care providers, health care systems, and patients needs.

Robin Pomeroy: Under that scenario, the patient is more confident that they are getting the treatment that they actually need. Would it be a noticeably different experience, though, apart from just that confidence?

Meni Styliadou: Yes. On a large scale, OECD tells us that currently we spend 20% of our health care costs for not needed interventions. That's huge. So that's the cost element.

But then I think there's the element of the cost on the individual, because it's not just the cost of the health care system or of what the society pays, it's also they get submitted to unnecessary interventions, you have difficulties to get access to the interventions you need, or you have difficulties to get access to the doctors you need. So your overall outcomes in health care are not optimal, are not what they should be .

Robin Pomeroy: Can you give us an idea of how widespread this is at the moment? You know, if you Google value based health care, you are told it is a term coined in 2006 by Harvard professor Michael Porter. So the idea has been around forgetting on for two decades. Has it actually been put in practice in places?

Meni Styliadou: It's very small pockets. I'm an antitrust lawyer in telecoms. I moved to health care more or less in 2006, more or less the same time that Michael Porter was writing his book. And back then I joined Novartis, and I was responsible for European public affairs, based in Brussels.

I read the book in 2008. And now, having come from the technology sector, I was very surprised with inefficiencies I found in health care with this misalignment of incentives. And having read the book, I said, that's it. It's so clear what needs to happen. So I decided, let's organise a conference in Brussels. Let's invite the [European] Commission and the ministers. I had the possibility to do that and I did it. I could not pay for Michael Porter. He was too expensive, but I could afford Elizabeth Teisberg who is the co-author of the book. So Elizabeth came to Brussels. We had the conference. The commissioner was there. There were a couple of ministers, captains of the industry, 200 people in the audience. And I felt job done. Now, it was going to take 3 to 5 years maximum for this to really resonate with everybody.

Robin Pomeroy: You felt it was job done because...

Meni Styliadou: It was obvious.

Robin Pomeroy: It's win-win all around and there will be efficiencies and everyone's experience is going to improve. Sorry, I interrupted you. Why was it not job done then in the next couple of years?

Meni Styliadou: That's a really good question. And I spent the rest of the last the last 15 years trying to figure it out.

It's is a big change. It's a huge change of the system. And it is a really big change of the way hospitals operate, of the way health care professionals are being rewarded to a certain extent.

So it is a massive change. And these very big changes tend to happen only when governments decide to do it and they enter into the space very seriously. And governments decide to do these big changes, whether there is a big opportunity or a big threat of some sort. And in that case, we may actually reaching that tipping point because we are, as a society, we start seeing that we are ageing, the health care expenditure continues rising, and as a society, we can't quite afford the same type of health care.

But it needs a crisis because such a big change often requires some type of crisis, or some type of huge innovation. In the case of health care, I actually believe that we are approaching this tipping point because we have a bit of both.

So on one hand we have the crisis. The crisis is emerging everywhere. On the other hand, we also have the technology. Innovation will come through digital technologies. So a lot of the things that we couldn't do earlier, now we can do them. We can actually monitor, for example, the results or the way we call them in our language, the outcomes, the patient outcomes through digital means. It makes the solution easier, and at the same time the problem becomes bigger. And that's why I think we're kind of reaching that tipping point.

Robin Pomeroy: So let's talk about measuring patient outcomes then, which as you say, is vital to this. If you're not just counting the number of procedures or the amount of medicines being prescribed, you're measuring the outcome and the experience of the patient.

Meni Styliadou: As I told you my story after that meeting, and having realised that value based health care is not happening anytime soon, I started thinking, okay, how can we accelerate this movement in a practical way?

One way is to talk to governments, but that is not always working. So how are we going to do it in a different way? And my thinking was there's one stakeholder who will benefit hugely from that. And these are the patients. Because if you think about this huge transformation, we are talking about the health care providers. I think they would benefit as well, but not immediately. There's also this change that needs to happen.

The patients, however, they have no say in all this. We are very, very passive in the health care system. So the idea was: what if we use these digital technologies to give patients the tools to start measuring their outcomes, but in a way that will be listened to and it will only be listened to if it's standardised.

So you're writing 'I'm very tired', is interesting, but doesn't mean anything to a scientist. But if you say that I have a level of fatigue that doesn't allow me to do my daily shopping or doesn't allow me to get out of my house, and this is how fatigue is being measured in a certain way, then it means something to a scientist.

So the idea was, okay, what if we were to give to patients these digital tools so they start measuring these outcomes in a standardised way, and this creates a language, a common language, between patients and physicians, but at the same time it creates transparency of outcomes and it gives to the patients the possibility to actually measure what they can report - the patient reported outcomes.

But this also gives them the possibility to see when it works, when it doesn't, where it works better, and where it works least well.

Now the data are being aggregated in independent entities, which we call the observatories, and the mission of the observatory is to observe health. So to observe the outcomes.

It's not about creating a blame. So it's not something like TripAdvisor for health that you see that the outcomes are better in this hospital or in other, but it creates the transparency of the outcomes and it creates the incentives in people to actually start comparing and see what works and what doesn't and what they can do better and what they can do less well.

Robin Pomeroy: And that is not done on a patient by patient basis or hospital by hospital. Regional, Countrywide?

Meni Styliadou: Yes. So to make this work, you need to work with the physicians. You need to work with the doctors. Because I have to say that they are very frustrated themselves with the way the health care system is being delivered.

Now, not all are equally incentivised or equally inspired by this, but there are a lot of physicians who actually really want to work with a standardised way for measuring patient outcomes and really finding ways to improve patient outcomes.

These millions of people have become doctors because they want to improve patient outcomes. Life sometimes could make them cynical like it does with all of us, but their intentions are the right ones.

So we've started this in a consortium with a number of top academic hospitals across Europe, and we are now three years now that we started the project. And actually I'm very pleased to say that we now start implementing this proposal. These hospitals are now starting utilising these patient reported outcomes in their communications with the patients. So these are in Germany, Austria, Netherlands and Spain. These are some, as I said, top academic hospitals there. But it starts. I hear now that there's more and more interest, for example, in Germany with other hospitals to also join to engage in this patient centred way of communicating.

Robin Pomeroy: And do you think it is applicable across different regions of the world? As you say, there are very different systems. Of course there's lots of countries with much less well funded health systems. Is it universally applicable?

Meni Styliadou: Absolutely, because at the end of the day, if we make this a language, which is our intention, it's what we're aiming at, it is a language that all patients want to speak.

Because there is this awkward moment when you go to see a doctor and they ask you, how have you been? And maybe you remember how you've been the last week. But it is unlikely that you remember how you've been the last six months or the last year. So the possibility of actually measuring your outcomes in a standardised way and being able to go there with a dashboard which shows how you've been. And also tell them what is that bothers you most and where you would like the emphasis to be in your treatment. It makes the conversation better and it creates true patient empowerment.

Robin Pomeroy: In some of these places is this an app on a phone where people are filling it in every day?

Meni Styliadou: Yes, sometimes every day. Doesn't need to be every day, depending on the disease, depending on the condition.

And this is also an area of research. Right. Because as I said, we are creating languages here. So there has been usage of PROs, of patient reported outcomes, in clinical trials, so in the development of drugs, for many years now, that's not a new thing.

What is the development is that we say we are now using versions of that in the clinical setting as a communication between the patient and the doctor. And that's not quite the same because in a clinical trial it's a trial which means that there is a nurse, there's a certain continuity in how you measure things because you are measuring a drug, measuring how efficacious or not a drug can be.

In the clinical setting, the conversation is how can you doctor a physician, nurse and patient communicating better so that you focus the energy on patient's outcomes. So it's a similar mechanism, but it's not the same.

And in developing this language, because that is what it is, it's really important to be pragmatic. It's not a research project. It's not the idea. It doesn't need to be very precise. The important thing is that it improves the communication. And that means that sometimes the patient feels like doing it twice a week, sometimes before they want to do it once per day. The system has to accommodate for that because the important thing is to satisfy the patient's need and help the patient articulate towards the doctor, but also the health care system more generally, what it is that they need most, and do this in an evidence based way.

Robin Pomeroy: So it's kind of in a trial phase, would you describe it, across three or four countries. What needs to happen then to scale this up?

Meni Styliadou: Right now, I have to say my own brain is focusing on delivering in the countries where we are established.

I actually think there's not that many barriers to bring this to other countries. Because already the result of our work, which is what we call the pragmatic sets, can be used more broadly, they're publicly available, other hospitals can use them as well.

So I don't think the barriers are that big.

It's important to remember that one benefits from technology here. So leveraging digital solutions here is really, really important. And probably we're at its infancy because it's not about answering a questionnaire, right? There are a lot of technology solutions that, if appropriately adjusted, can really help creating this patient generated data that can help the conversation.

So, for example, your movement - you don't need to answer a questionnaire - or your sleep, the quality of your sleep - there are passive ways of capturing this information.

Robin Pomeroy: A lot of people capture their own data, all kinds of health data. Certainly sleep, the performance of your heart. All this kind of stuff. These are these are quite common things that people choose to do for their own monitoring already.

Meni Styliadou: But frequently, when you bring this to your doctor, they say 'it's noise - I don't know what that means'. So what needs to happen is that they need to be translated into language, which also means something for the doctor. And that's the work that we're currently doing.

Robin Pomeroy: Tell us something then, finally, about the work of the World Economic Forum. There's this thing called the Global Coalition for Value in Health Care.

Meni Styliadou: This is a forum that was created, I think, three or maybe more, years ago, with the idea of making the world more aware of how value based health care can really transform health care, and has done some great work in creating a community of enthusiasts who learn from each other and encourage each other in driving this forward.

I think right now we are at the point where we really need to focus more on how technologies can help because, as I said earlier, they offer yet another tool to actually make value based health care happen, to resolve some of the problems that value based health care had at its beginning.

Robin Pomeroy: When will I be getting value based health care, do you think, or anyone who might be listening to this?

Meni Styliadou: I think you will start receiving value based health care when you will start being able to monitor your own results on your own, because then your voice will matter.

Then you will be able to see or to compare your real outcomes to the outcomes of other patients. And as a result, you will become an agent of change yourself because you start asking the right questions.

I'll share with you another little story, which is about Sweden and Switzerland. OECD did a study on breast cancer several years ago and they found out that the outcomes in Sweden were some of the best in the world. Maybe not the top, but second top, anyway. And the outcomes in Switzerland were somewhere like eighth or ninth. However, the patients in Switzerland thought they had the best possible health care in the world, and the patients in Sweden thought that their health care was declining. You know why? It all had to do with how patients were treated.

So in a place like Sweden, patients are treated with a number. It's a socialised, NHS type of environment, so they get excellent care but it's very much like, you have a number, you go there, you do that, there's not much personal attention.

Switzerland has a different health care system and some of the most, I think in my opinion, luxurious hospitals I've ever seen. So patients had an excellent patient experience.

So that's really important for patients. But what's even more important is survival after breast cancer. But this is something that as a patient, you can't judge. You need the data in order to be able to judge.

So the moment we start having this data, and that's why I say the moment you will start having a dashboard with your outcomes and possibilities to compare with the outcomes of the average patient or a similar patient, then regardless of what the government has done, you will be able to see: why my outcomes are not as good, and what can we do about that, and what can we do about the other? So you will trigger the transformation to value based health care on your own, even without the government doing anything about it.

They will eventually because they will have to listen to you. But that's why I'm saying that's going to be the signal we are going towards value based health care.

Robin Pomeroy: Meni Styliadou is the founder and co-lead of the Health Outcomes Observatory and Vice President Health Data Partnerships at the Data Science Institute at Takeda.

To New York now and Dr Catherine MacLean who works at the Hospital for Special Surgery, a hospital which specializes in orthopedic surgery. As Chief Value Medical Officer, Catherine is spearheading ways of putting value based health care into practice. I started by asking her how she explains to the average person what value based health care is.

Catherine MacLean: Consumers, you know, the average person, the population makes value based decisions every single day. When you go to put gasoline or petrol in your car, when you buy something at the grocery store, you're you're making these value based decisions.

And we should be doing the same thing in health care. I think it's more difficult from a consumer standpoint because, number one, it's hard to understand the quality. I think we're getting better at being more transparent about the quality of one provider, one hospital versus another, one doctor versus another, for example. And then the cost in the U.S., there's now legislation that says, you know, we should be transparent about the costs. We're getting there, but we're not there.

But I think the other complicating piece in health care is contrast to when you buy a product. You buy a car, right? You take that item home with you. But health care, you're really buying health. I would say value based health care is focused on improving health. It's focussed on the long term.

And if you take a procedure, for example, we do orthopaedic surgery. We'll take the example of a hip or a knee replacement. You could go to one hospital and it may cost, you know, some amount of money. You can go to another hospital. And I'll, you know, I say it costs more money, maybe 20% more, you know, at a different hospital. But you can't just think about the cost of the procedure. You need to be thinking about the cost of the episode.

So maybe that hospital that's a little bit more expensive, maybe their readmission rate is very, very low. And so when you think about having a procedure, you need to think about the cost of care from the time the patient has the procedure to some reasonable time point in the future. I would say for many surgeries, you know, that's probably generally in the 30, 60, 90 day window, for a complex surgery you might want to think about a year out.

And in fact, we've done studies looking at some of the very complex procedures that we do and have demonstrated a $40,000 difference in that one year episode costs. And along with that $40,000 difference, our hospital being less expensive, we see every single complication is much lower: much lower use of emergency rooms, much lower use of revisions, much lower use of readmissions for for other reasons.

And so I think that that quality piece is is very tightly related to the cost piece.

Robin Pomeroy: And how does this differ from the old school, if you like, something that's not value based health care? Would I be right in thinking: you have something wrong with you, you have a procedure done, you're done an out of it. And then if you have a complication with that, that's then an additional thing that's separate from the procedure you has before. Is that the difference?

Catherine MacLean: Well, you know, in the kind of old world and and still very commonly in the current world, if you go to a hospital and so you go home and you have a complication, you come back to the hospital, depending on the payment model, chances are the hospital is going to get to charge you more money for that complication.

Whereas in a value based type of a payment model, there's an amount of money that gets paid that's going to cover that complication. So there's incentives for providers to think more holistically about the care that the patient has - doctor gets called in the evening and maybe it's just easier to send the patient to the emergency room, but maybe they don't really need to go to the emergency room. Emergency rooms are very expensive. I mean, the reason they're so expensive is because they're staffed up. They've got, you know, specialised equipment to take care of emergencies.

But the value based programme, chances are the doctor would say to the patient, Well, why don't I see you first thing in the morning in the office, if the doctor has determined that it's safe.

Robin Pomeroy: Can you give us any examples of real world examples of how value based health care in your experience has improved the experience for a patient? Is it really radically better for patients, for providers? Any examples that come to mind?

Catherine MacLean: The CMS, the Centers for Medicare & Medicaid Services, which pays for Medicare in the United States, has a number of different value based programmes that it's testing out. And we participated in one called CJR, comprehensive joint replacement.

And in that programme we basically were incented to have a fixed price over a 90 day episode. And during that episode, at the end of the day, if the patient was less expensive than that, that target price, we'd get the money back. And then if the patient was more expensive, we'd have to pay CMS the money back.

Some of the things that we were able to do in that programme was, that money we got back, we could put into place different programmes that are not typically paid for by the payer. And so one of the programmes that we developed was something we call HSS at Home, and this is before COVID.

And at that time, virtual physical therapy was not paid. No one would pay for it. And what we were finding when we looked at the cost of care for our patients, they would go home and they would have someone come in to the home, home help, a home physical therapist. And it seemed pretty expensive. And it also seemed like the patients were getting more than they needed and arthroplasty surgeons were actually noticing that patients would come back for the six week follow up and their knees were, you know, kind of red and swollen, like they were moving around too much. It was too much. So we put together a panel of orthopaedic surgeons, physical therapists, social workers, everybody, and kind of determined: could we do physical therapy virtually during that six week period.

I think most people think of physical therapy as kind of a hands on thing, but a lot of it is observational. You're looking at the patient walk. Honestly, in the weeks after, you know, a knee or hip replacement surgery, you're not moving around that much anyways. You know, the issues are quite different anyways.

So we put this into place and I think that was so nice about it was that we had continued care, not always, but some of the time, you know, the patient, when they went home, you know, they would see the therapist who took care of them in the hospital and if not, we would have the therapist. She was going to be doing the telecare, you know, meet with them before they left the hospital.

And it is a roaring success. And the specific outcomes that we've been able to measure are, you know, patient satisfaction is very high. It was high also if the therapists went into the house, but a little bit higher. The outcomes - and we're looking at patient reported outcomes both in the short term and in the long run - like did this have a long term, you know, good or bad effect? So our patient reported outcomes are better. So that means patients pain and functional status and their quality of life and complications were lower.

So what we observed was with the physical therapist on the video camera, with the patient, other things came out. The patient might say to the therapist, I'm having some troubles with my medicines or I'm having a lot of pain. Or maybe I'm having constipation - very common after surgery. Well, guess what? The therapist is literally sitting next to a nurse practitioner who does most acute care so hand the patient over and manage it. And it was a whole lot less expensive.

So higher patient satisfaction, better outcomes, and less cost of care. And that was a very innovative programme. And so in that model, to use the money in a different, more effective way, was much more patient centred.

Robin Pomeroy: It's kind of obvious to say if you're looking after a human being's health, you need to make sure their health is good. Which is what you're talking about. You're looking at not just 'we'll patch this up and send you on your way. We're going to monitor over time your experience as a patient'. So why isn't that the norm? Why is this a new thing? And also, we've come to the realisation that what we need is value based health care. Why isn't everyone doing it right now?

Catherine MacLean: So I think a big challenge, honestly, is the payment models, right? And so, you know, in that example I just gave, there wouldn't have been a way to pay for that.

Another thing that that model allowed us to pay for was tracking. Right? So there is an administrative costs to track the patient across that entire episode of care, to do reporting back. And I think that our health system, I mean the United States is famously fragmented, but I think the the health system worldwide is somewhat fragmented as well.

Because if you think about just the patient getting a hip or knee replacement, you've got different people that are doing their different part, right? So the surgeon is in the operating room and we want that surgeon to do a fabulous job. But then after the patient leaves, you know, it's really not the surgeon's responsibility. They are the captain of that ship and they want the best outcomes, but they're not down in the weeds on how exactly the physical therapy is delivered, for example.

And if a patient has, you know, some complication, particularly if it's not a surgical thing, maybe it's the heart or the GI tract, and this is an orthopaedic surgeon, they've got to look to somebody else. And I think in the kind of current, mostly current world or, you know, old non value based world, they might get sent to emergency room, they might get sent...

Whereas if you've got a system in place, you're thinking about all these pieces. And I would say too, in our programme, we put together a whole health optimisation program for before the patient has surgery. So we looked at the data. CMS has big data sets that we could look at. And we said, okay, well, these are the things that patients seem to be getting in trouble for in our patients. These are the things they get readmitted for. What can we do before the patient even gets admitted to the hospital to tune them up, as it were? Right. And that's not the surgeon doing that.

So, for example, if a patient uses a certain amount of opioids before they have their surgery - and remember, these are patients that are happening replaces they're in a lot of pain - if patients are using a lot of opioids, we know that when they get into the hospital, they're going to require even more and that they're going to have difficulty with their pain management. So we have a program specific programme for them before they come into the hospital to manage that.

If their diabetes isn't under perfect control, we get it under perfect control. Because there's a higher risk of infections if blood sugars are not under control, for example.

So I think it's like taking that holistic approach. But there is a cost to that, right? So there's like an administrative cost to think about the whole program and to manage that whole programme . And I think our payment systems are not currently set up to do that.

Robin Pomeroy: You've got lots of different health care professionals involved in the treatment and you're trying to track what's happening throughout that process. And so you're needing data to do that. And I've heard this expression 'data interoperability' that's quite important to be able to do what you're doing. Could you explain to us what that is and why it's so important?

Catherine MacLean: Yeah, sure. And I would also say this particular programme is also an outlier in that CMS made very rich data available to the entities who are participating.

So in the U.S., we have a multi-payer system - that happens in other countries as well. The health system itself is a bunch of different hospitals. We have over 6,000 hospitals in the United States that are generally not related to each other.

There are systems as well. So for example, if a patient comes to our hospital, which is an independent speciality hospital, and then they get readmitted someplace else, we have no idea if that patient got readmitted or why. If they call the doctor we'll find out. But, you know, we have found as a result of this CJR programme that we were in, that only about half of our readmissions actually come to our hospital. Right.

And so in that program, CMS on a monthly basis made available to us the claims data for our patients so we could see exactly what was happening with them. And that is so critically important to understand your population and how they're doing.

About half of our business is commercial, and the commercial business is scattered over a number of different health plans. We don't have access to the claims data for that population, named claims data. The other thing too is, CMS, when they give us a data like we had literally we said, okay, here's the patients got readmitted for, let's say an infection. We could go into our - we knew the name of the patient - we could go into our electronic medical record, identify the patient, look and see, okay, what was going on here or something we could've done differently. And that's, you know, really that transparency of data is incredibly helpful for the care delivery.

Robin Pomeroy: What has been your reflection on how other countries are doing on this?

Catherine MacLean: It's something that people across the world are looking at. And so as part of this World Economic Forum programme that we participate in, I've had the opportunity to speak with colleagues across the world. And I would say, you know, in Europe in particular, there's a great interest in value based care.

And it's it's kind of interesting that, regardless of the specific payment system, and it's very different, different countries in Europe, there's still a driving interest to get to value based care.

One reason is that health care is incredibly expensive. And money we're spending on health care is money that could be spent on something else.

Robin Pomeroy: Sure. I think the UK's NHS, certainly the biggest employer in the UK, and therefore you can imagine the budget for it.

Catherine MacLean: When you think about that, you know, on the one hand it's like, okay, but if that's something that we want, you know, it's something valuable to us, then let's pay for it. But we know that there's a lot of waste in the system.

The Institute of Medicine in the U.S. has famously estimated that about a third of health care in the U.S. is wasteful. And that's a lot of money. And in fact, in the U.S., the comparison that that 30% of waste in our system is more than our entire defence budget, is more than our entire education, defence budget. Those are shocking numbers, it's more than our research budget. And so I would say that that waste could be, you know, no matter where you fall on that political spectrum, if we could spend that money in a better way.

Robin Pomeroy: Do you feel it's going in the right direction in the US, but also around the world? Do you think are the policies being put in place in the US and elsewhere in the world? And if not, why not?

Catherine MacLean: Yeah, so I think that there's definitely an effort, I think there's a recognition that we need to get to value based care.

And I think that the challenge, at least in the U.S., is there is a enormous fee-for-service infrastructure that was very expensive to build and will be very expensive to change.

I think CMS is leading the way in the United States. I see less meaningful value based care programs from the commercial payers. And I think that part of this is the fragmentation of the U.S. health care system. So I think that other countries that aren't so fragmented would probably have an easier time at this.

And the negotiations between hospitals and insurance companies in the US are largely fee for service. You've got the hospital coming in saying, I want more money. You've got the plan coming in saying I want to reduce the trend or at least keep it stable. And it ends up being reduced to a unit cost discussion.

And we present data to show, yeah, but look at our episode cost and look, our episode cost is lower. I think they believe us. But the infrastructure, it's administratively expensive for a health plan to do a one off programme, kind of building the data infrastructure, and we just need to get over it, you know, and there needs to be an investment, I think, to get to the value based care.

Robin Pomeroy: To a greater or lesser extent that applies. Obviously, the US is very, very different from most countries in Europe, but also these are big juggernauts to turn around that have been using a certain way of thinking and funding and budgeting for for decades. And it's and it's getting more and more expensive all the time.

Maybe that is the political impetus, the fact we have ageing populations in these more developed countries that have big health budgets, to actually make the change towards what you're aiming for yourself?

Catherine MacLean: You know, interestingly, I was recently speaking with a colleague who's the CFO of a hospital system in the Netherlands. His perspective on value based care was very pragmatic. He would agree that we ought to be, you know, promoting patient centred care, etc. But when he's looking at the numbers, he's looking at an ageing population which is going to require more health care and at the same time is going to be leaving the health care workforce. So within the health care system we're going to have more people and less people to take care of them. And you know, his view is just as is just kind of a very practical matter of how are we going to take care of these people. Fewer staff, we have to be higher value, which is like there's no other practical way that we're going to be able to take care of the population.

Robin Pomeroy: Has there been any kind of ballpark figure of best case scenario, what could be saved, what impact this would have on the cost of health care?

Catherine MacLean: Well, you know, using the US example, I have to look up the number and look it up periodically. But I think we're up to maybe 4 trillion, you know, maybe five. Thirty percent of $5 trillion - that is a huge amount of money. You know, over $1,000,000,000,000 - that's just in the US.

Robin Pomeroy: In your collaboration with the World Economic Forum, you've met people in similar situations, other parts of the world. What about the less developed countries, places that are building health services that aren't yet at the level or the expenditure of of Europe or the US or other developed countries? Have you had experience with some of those countries? Where does this whole conversation fit into that?

Catherine MacLean: That's something has been so amazing to me with this World Economic Forum initiative is how the same principles really apply.

And I guess I would say a word of advice to countries whose health systems are 'less developed' and I say that in quotation marks. Because what I see is other countries in some ways trying to mirror some of the things that we've done, ways to track expenditures that we do in the U.S. in our fee for service system, which, the whole infrastructure is problematic in getting to value based care. So I think, oh, don't go that route. Think about this differently.

Robin Pomeroy: Catherine MacLean, Chief Value Medical Officer at the Hospital for Special Surgery in New York. Before her, you heard Meni Styliadou, founder & co-lead of the Health Outcomes Observatory.

To find out more, search for the Global Coalition for Value in Healthcare on the World Economic Forum website.

We’ve done several episodes about innovation in health care - have a look through our archives on wef.ch/podcasts where you’ll also find our weekly sister podcast Meet the Leader. You can also get all those podcasts on Spotify, Apple and all other podcast apps. And join the conversation on the World Economic Forum Podcast club on Facebook.

This episode of Radio Davos was written and presented by me, Robin Pomeroy. Editing was by Jere Johansson. Studio production was by Gareth Nolan.

We will be back next week, but for now thanks to you for listening and goodbye.