Value-Based Management in healthcare

Generally speaking, one of the most pressing issues in healthcare is the near total lack of awareness of the costs associated with patient intake processes (especially with respect to patient outcomes). This study aims to shed light on the topic by attempting to answer several questions linked to principles of measurement from a perspective of Value-Based Healthcare (VBH), an advanced system that applies an innovative approach to healthcare management. We set a number of objectives for our research, specifically: 

• To update current studies on costing by adopting a Time-Driven Activity-Based Costing (TDABC) approach based on two fundamental principles: patient care cycles “consume” activities; activities “consume” resources, depending on the time it takes for key resources (be they people-based or asset-based) to perform said activities. 
• To map the main activities involved in a specific treatment. 
• To calculate the cost of care. 
• To share the research design and implementation with primary stakeholders in the national healthcare landscape. 
• To increase the level of significance of the evidence by identifying a sufficiently broad, representative sample of medical centers for our analysis. 

Extracorporeal photopheresis (ECP), a leukapheresis-based therapy, is the recommended treatment for patients with conditions associated with cutaneous T-cell lymphoma (CTCL), acute and chronic graft-versus-host disease (aGVHD and cGVHD) and other pathologies (e.g. organ rejection post-transplant). There are two methods for performing ECP: 

• In-line: utilizing a single device (an integrated system). 
• Off-line: utilizing two devices (a multi-step system). 

Extant literature provides analysis of the two procedures in terms of time required and cost incurred. Relevant studies have applied approaches and methods from Health Economics and Management Accounting in a range of contexts (in France, Italy, and Sweden). As regards Management Accounting, bottom up approaches were frequently implemented to determine procedure costs, in most cases using TDABC (or so researchers claimed).  

Using the TDABC method, we calculated the costs of performing ECP using the two procedures by conducting a number of interviews (online, and in one case in person) with healthcare professionals in five medical centers in Italy (Sabes Bolzano, ASST Monza, ASL Pescara, San Raffaele Milan and Città della Salute e della Scienza in Torino). We chose these centers based on four factors: geographical macro-area served, legal status, size class of ECP treatments, and the use of in-line vs off-line. While the structural and organizational combinations (the former, treatment rooms and physical space; the latter, medical professionals and opening hours) of the two treatment methods for each site remain basically the same, the technological requirements differ, with managerial impacts on the use of in-line. 

• Fewer healthcare professionals and different factors of production are needed per procedure; this makes it possible to free up capacity, which can then be redirected to other activities (such as other procedures). 
• Efficiency of “given” factors of production is higher. 
• When there are two devices at two treatment stations, two ECP procedures can be performed in tandem, cutting marginal costs and increasing operational efficiency. 

Next, we mapped out the steps in ECP delivery and then compiled the report grid. Here we recorded data pertinent to the factors of production and to the calculation of the Capacity Cost Rate (i.e., on personnel, space, technology, and consumables). In all the steps, we found a significant difference between in-line and off-line procedures, with less time required for the former across the board. 

Although time was considerably less, the costs of the in-line procedure were slightly higher compared to what we observed in the three centers that offer the off-line procedure. Comparing public medical centers alone, costs of the in-line and off-line procedures tend to realign; the same is true for the variance we detected. As regards the main causes for the divergence between the two types of procedures, we pinpointed three: 

• Substantially higher capacity cost of medical personnel due to wage differentials. 
• Different production models with greater use of nursing staff. 
• The formula utilized in the all-inclusive contract for ECP technology with regard to the in-line procedure. 

What clearly emerges from our study is the fact that the substantial differences between in-line and off-line procedures can be attributed primarily to the actual treatment phase. (The activation/ collection phase is more time-consuming for the off-line procedure.) Beyond clinical risk profiles that are noticeably different, we were able to find relevant evidence relating to Value-Based Management in Healthcare: 

• Wait times and patient handling times are significantly higher with the off-line procedure, making the patient experience less positive. 
• Based on initial estimates, the resources required do not differ greatly; however, the operating conditions are extremely heterogeneous, with major organizational impacts. 
• Less time required per procedure means a greater number of procedures can be done, therefore in-line can make a substantial contribution to increasing the coverage rate. 

In light of our findings, we can assert that there are certain priority interventions to deploy to align control systems with the principles of Value-Based Healthcare. Specific actions that will become increasingly essential in the future are: aligning the control system with the process dimension; designing a control model like a package of instruments organized into several interdependent systems; defining a strategy for developing and hybridizing the skills of personnel of the medical unit; and monitoring all critical success factors in a transformation path or project.