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What is value in healthcare?


The term "value" has recently become a topic of conversion in healthcare. But what is value? And what role does it play in healthcare? In this entry, we will discuss how value works in healthcare.

Historically, healthcare involved entities that have operated under the similar volume-based business models as their counterparts in other sectors. Health services have been treated as sales, and services have been charged per-item (just like in a store). Unlike a store-bought item, healthcare services cannot be returned if ineffective; and what’s done is done. Health insurance, like automobile insurance, has focused on reimbursing each individual service, while utilizing the deductible system. It has been realized however, that for a sector that involves potential life or death and human livelihood, such a system is inadequate. Unlike a car, a human life cannot be replaced. Furthermore, car inspections are mandatory in the United States, while health checkups are optional. How can we reform the system to work for healthcare? The answer is to switch to a value-based system.

But first of all: What is value? Value is the provision of high quality service at minimum cost necessary.


A value-based system pays based on quality and cost efficiency. In the case of healthcare, more is paid for keeping individuals healthy (and therefore cost efficient), while less is paid for excessive treatment and avoidable declines in health. Such a system, where there is an incentive to reduce redundancy while providing superior quality, fits healthcare remarkably well.

In fact, insurers in the United States (including Medicare and private insurers), are already making bold steps towards realizing a value-based healthcare system. This has brought about many questions about what will happen to healthcare from now on. Indeed, value-based healthcare will transform the medical market in a plethora of ways.

How will value-based systems change the US healthcare market? Who will be affected and in what ways?

Stay tuned for next time.

Written by Michael Rachmilowitz, Informatics Product Manager, Fujifilm Healthcare Americas