Value-Based Healthcare
Achieving excellence in healthcare means thinking about value. Current frameworks, like the Quintuple Aim and Learning Health Systems, recognize that managing resources well is part of high value healthcare. Costs must be considered in relation to the outcomes they deliver.
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- Value-based care
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What is Value-based Healthcare?
Value-based healthcare (VBHC) is about linking resources used for healthcare programs or services over a patient’s journey to the outcomes that matter most to patients and communities. Implicitly, patients’ preferred outcomes also reflect their values.
VBHC recognizes that what works best for whom in different contexts will vary. Our understanding of how to deliver value will also evolve over time. As a result, VBHC avoids over-specifying how outcomes will be achieved, e.g. the number of services delivered or specific activities or products.
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Examples of VBHC in Canada
VBHC initiatives exist in many forms, some of which directly link payments and outcomes.
For example, outcome-based procurement awards contracts to suppliers based on meeting pre-defined metrics.
Social Impact Bonds are another pay-for-success model. Capital from private investors is used to pay for programs that enhance the social good. Investors’ return on investment depends on the extent to which pre-defined social outcomes are achieved.
When an outcome is well-defined but how to get there isn’t as clear, open innovation challenges reward innovators who best meet the outcome sought. This approach can also uncover novel and promising practices.
In other cases, VBHC may guide policy or program design. For instance, bundled funding provides pre-determined payments to a group of healthcare providers for all services within an episode of care.
VBHC can also shape planning and evaluation, as in a multi-province collaborative to enable paramedics to provide palliative care, enabling patients to remain at home where most prefer to be.
What Value-based Healthcare is not
VBHC focuses on the whole, not the parts. It does not aim to optimize individual components of an episode of care in isolation (e.g. focusing on just the surgical component without considering pre- and post-care, in addition to surgery). Rather, it seeks to understand and promote improvement in outcomes and costs that span an episode of care or population group, not just those delivered by a specific healthcare provider or at a particular time. Targeted improvements must contribute to the overall goal that cuts across organizational and/or budgetary boundaries.
The focus of VBHC is not cost-containment, or to reward cost reductions in isolation. Both overuse and underuse of healthcare can affect value. The aim is to encourage services that deliver high value, and to scale back or drop those that do not. It is also to re-balance the mix of services to improve outcomes at the same or lower cost. In some cases, increased value may come from options outside the health sector that improve health outcomes, not just services offered by traditional health care providers. How we learn, live, work, and play can all affect our health. A broader focus that includes interventions addressing social determinants of health can contribute to value-based care.
While evidence-informed practice can facilitate more appropriate care and improved outcomes, it is not the ultimate goal of VBHC. Providers can use evidence regarding the effectiveness of interventions in order to design and continuously adapt models of care to optimize value. However, VBHC is not the same as pay-for-performance models that reward delivery of specific care processes, e.g. prescribing of medications recommended in clinical guidelines, rather than outcomes.
Getting started with VBHC through HEC
Need help identifying where VBHC might be a fit for your context ? There are many ways you can get started or refine your approach, including guides and resources from HEC and other VBHC practitioners. You can view a sample of the resources available below:
If you’re just beginning the VBHC conversation, try this prioritization exercise (PDF). It takes less than 30-minutes to generate and prioritize initiatives that deliver value within your context.
Experienced VBHC practitioners identified twelve minimum criteria for a successful VBHC initiative . You can assess readiness or do a check-up on current VBHC initiatives using this VBHC Min Criteria discussion guide.
Analyze your VBHC initiative from the different perspectives of key interest holders by using this Personas activity (PDF).
Value can also be derived from reducing or eliminating low value initiatives. For a fun, collaborative way to identify potentially low value initiatives at your organization, consider hosting a Digging For Dinosaurs Contest (PDF).
Any organization striving to deliver value-based healthcare must ask themselves how do we know what matters to the patients and communities we serve? Learn more about engagement capable environments: Engagement-Capable Environments: Organizational Self-Assessment Tool
Additional Resources
Value-Based Healthcare in Canada: How the shifting paradigm will impact specialty medicine (PDF)
Value-Based Healthcare Canada - The Conference Board of Canada
From value for money to value-based health services: a twenty-first century shift (PDF)
Value in Healthcare: Laying the Foundation for Health System Transformation (PDF)
VBHC Case Studies
Paramedics Providing Palliative Care
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Paramedics were trained to assess people with palliative care needs (for example, pain management) and treat them on the spot at home. Paramedics are trained to provide this care without a transfer to hospital, if appropriate.
Finding Value in Palliative Care
Targeted Outcome
Enabling palliative patients to receive care at home, where most prefer to be
Resource Considerations
Reduced costs associated with fewer ED visits + saving paramedics’ time
Results
60 per cent of 9-1-1 calls resulted in people being treated at home instead of being transported to the emergency department (compared to 90 per cent of 9-1-1 calls typically resulting in emergency trips);
Paramedics saved an average of 31 minutes per visit by treating palliative patients at home compared with transporting them to the emergency department;
A return of $4.60 for every one dollar invested in the program; and
Over 92 per cent of surveyed patients and families were satisfied with the care they received by paramedics.
ImagineNation Challenges
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From 2011-2016 Canada Health Infoway used Open innovation challenges to reward innovators for making progress towards pre-defined goals related to the adoption of digital health solutions. Open Innovation Challenges specify the outcome to be achieved, not how it must be achieved. This approach can yield value by ensuring the outcomes to be achieved matter to patients (numerator) while controlling costs by only awarding money to those who best meet the outcome (denominator).
Finding Value in Award Challenges
Targeted Outcome(s)
Adoption of digital health solutions prioritized by Canadians
Resource Considerations
Resources went to those who best met the targeted outcomes
Results
$2.3 million in awards was distributed to 435 team or individual recipients
Collectively, teams' digital health solutions were used almost 75 million times during the challenges: 3.5 million times for consumer-focused solutions and 71.4 million times for solutions designed to be used by clinical teams
Outcomes varied by individual challenge but included things like growth in the use of digital health solutions for e-booking, patient access to health information and medication reconciliation
For more information:
Cardiac Device Procurement
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Value-Based Procurement awards contracts based on quality/outcomes and cost, rather than costs alone. In 2018 the Ontario Ministry of Health and Long-Term Care - in collaboration with industry partners, hospitals and a patient panel - developed an RFP to procure cardiac devices. It included a focus on outcomes important to patients (e.g. device longevity that reduces the need for future surgeries), in addition to efficiency through large volume purchasing.
Finding Value in Procurement
Targeted Outcome
Product requirements that reflected patient and health system priorities
Resource Considerations
Initial purchase costs, as well as longer-term resource use (e.g. future surgeries to replace devices)
Results
Including a patient panel in the procurement process resulted in a focus on product requirements that were important to patients, such as device longevity to minimize device replacements, and compatibility of devices with magnetic resonance imaging (MRI)
Savings were realized by procuring a large volume of devices at a provincial level, rather than individual hospitals procurements
Bundled Funding for Hospital to Home Pathways
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Bundled payments are for specific procedures or groups of patients that are designed to cross traditional silos to ensure funding follows the patient. This funding method was implemented in 2015 for some Ontario Hospitals and homecare providers through the Integrated Funding Model (IFM) Initiative. This initiative consisted of 6 programs addressing 4 target populations, piloting pathways combining hospital and home care for a fixed amount of time post-discharge (e.g. cardiac surgery).
Finding Value Across Silos
Targeted Outcome
Smoother surgery experience, including pre- and post-hospital care.
Resource Considerations
Decreased costs associated with reduced 30-day ED visits/ readmissions and length of stay
Results
The IFM program was associated with positive patient outcomes and reduced healthcare costs
Hospitals who participated in IFMs saw improvement in a number of key metrics:
Length of stay decreased 10%
30-day ED visit/ death rate decreased by 19%
Average 90-day total costs decreased by 10%
The cardiac surgery project was found to be particularly successful given the care pathway was well-defined, time-limited, and generally consistent across patients
Sweet Dreams Social Impact Bond
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The Sweet Dreams Project in Saskatoon, Saskatchewan used a Social Impact Bond to provide vulnerable mothers and children with housing, parenting support, access to educational opportunities and employment skills development. Social impact bonds are a pay for success investment model where capital from private investors is used to pay for programs or services that enhance social good. Investors' return on investment depends on the achievement of pre-defined social outcomes.
Finding Value in Social Impact Bonds
Targeted Outcome
Keeping at-risk children out of foster care
Resource Considerations
Initial investment of $1M from private investors, with a 5% rate of return if outcomes are met
Results
The five-year goal of the Sweet Dreams project was to keep 22 children out of foster care by keeping them safely with their mothers continuously for more than six months after participating in the program.
As of 2019, 54 of the 55 children involved in the Sweet Dreams project had remained out of the child welfare system.
Some mothers in the program received early learning and child care training, and many began working at the Sweet Dreams Early Learning Centre.
The program won the 2019 Governor General’s Award for Innovation.
In 2019, The Government of Saskatchewan committed to $120,000 in ongoing annual funding for Sweet Dreams, based on the success of this Social Impact Bond. As of 2025, the Sweet Dreams program continues to operate through EGADZ, a non-profit community-based organization.
Value Based Healthcare Organizational Assessment
Experienced VBHC practitioners identified 12 minimum criteria that are important to a successful value-based initiative. The first four criteria below consistently rank as highest priority by health leaders.
Organizations can use the definitions to discuss and assess the strengths and opportunities of potential initiatives or an initiative that is already underway. Consider the initiative(s) in light of each of the following criteria – in which areas is it strong, sufficient but has room to improve, or must improve in order to move forward successfully?
Metrics that Matter to Patients:
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Clearly defined metrics that reflect outcomes that are important to patients/care partners and show the value of a change or improvement, both in terms of its costs and its outcomes. It’s ideal to use previously validated metrics when possible. (The metrics don’t have to be perfect but must be capable of showing change or improvement.)
Outcomes and Cost Data:
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Data that show the impact of the change or improvement on patient outcomes, and the costs related to various services or deliverables across the patient journey. Where possible it is best to leverage existing data and financial systems to align with broader quality improvement initiatives and to reduce survey burden on patients.
Clear Scope:
Data that show the impact of the change or improvement on patient outcomes, and the costs related to various services or deliverables across the patient journey. Where possible it is best to leverage existing data and financial systems to align with broader quality improvement initiatives and to reduce survey burden on patients.
Material Impact:
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The level of effort required to make the change or improvement needs to correspond with the extent of value that is likely to result – making the effort worth it in the end. Also, the people undertaking the change or improvement will want to see the benefits of the increased value.
Capacity/Skills:
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The level of effort required to make the change or improvement needs to correspond with the extent of value that is likely to result – making the effort worth it in the end. Also, the people undertaking the change or improvement will want to see the benefits of the increased value.
Dedicated Resources:
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Resources needed to make sure the healthcare change or improvement provides value. Consider whether there is appropriate funding for the initiative and dedicated staff time and leadership resources.
Clinical Leadership:
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It is critical that clinical leaders are engaged and effective along the care pathway.
Coordination across Silos:
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Health sectors or organizations involved share responsibility for costs and outcomes. Consider whether there are care pathways, if systems are integrated or if they can be integrated to allow this to happen, e.g. if appropriate information and resource sharing mechanisms are in place.
Supportive Policy and Structures:
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Governance, accountability structures and policy/regulations need to support implementation.
Aligned Payment Models:
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It is important that payment models allow the flexibility to pursue value, and that they enable higher value behaviours and decisions.
Proven Solutions:
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Solutions that have been tried and tested and have worked effectively in a similar context. Consider whether there are solutions that have already been developed which are proven to be more effective than the status quo. Note, open-innovation models may specify a problem to draw out possible solutions.
Time to achieve value:
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Achieving value takes effort and time. Are the time horizons aligned with funding and planning cycles? Do the stakeholders have realistic expectations of the time required? Different initiatives will require different amounts of time. For example, a procurement initiative may take less time, and a social impact bond may take more time.
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