Value-based healthcare: prerequisites and suggestions for full-fledged implementation in the Republic of Korea

Article information

J Korean Med Assoc. 2017;60(10):826-840

Publication date (electronic) : 2017 October 17

doi : https://doi.org/10.5124/jkma.2017.60.10.826

Joon Hurh, PhD Candidate ¹, Young-Hee Ko, PhD^,¹, Sang-Soo Lee, PhD ²

¹Seoul School of Integrated Sciences & Technologies, Seoul, Korea

²Medtronic Korea Ltd., Seoul, Korea

Corresponding author: Young-Hee Ko E-mail: yhko@assist.ac.kr

Received 2017 July 20; Accepted 2017 August 24.

Abstract

Healthcare systems around the world share the common goals of improving clinical outcomes, optimizing cost reductions and efficiencies, and expanding access to care in a patient-centric manner, yet they are stymied by 2 critical challenges: wide variations in patients’ clinical outcomes and soaring costs. In response to these challenges, many healthcare systems throughout the world are pivoting towards value-based healthcare (VBHC), to ultimately 1) move from volume-based to value-based care, 2) promote patient-centric care, and 3) reverse rising costs. While the United States and European nations are piloting alternative payment models, South Korea has a similar set of objectives to adopt value or performance-based payment systems. Two exemplary programs helping to move Korea towards a VBHC model are currently under way: the Support Fund Program for Care Quality Assessment and the Healthcare Benefit Appropriateness Assessment Program. However, in order to permanently establish a full-fledged VBHC system in Korea, the following prerequisites must be met: 1) normalization of provider payment rates, 2) development and dissemination of critical pathways, 3) implementation of pilot projects in the medical device sector that contain risk-share payment schemes, 4) implementation of registries to aid data-driven coverage decisions, and 5) implementation of bundled payment pilot programs for the medical conditions for which proven critical pathways already exist. Ultimately, the medical device industry is in a unique position to enhance ongoing endeavors by Korean health authorities and providers to achieve quality patient care and cost savings, all in the service of the transition to VBHC.

Keywords: Value-based healthcare; Clinical outcomes; Cost control; Delivery of health care; Republic of Korea

Figure 1.

Frameworks transformation for a value-based health care system establishment. ICT, information and communication technology. Reproduced from Kang HJ. Health Welf Policy Forum 2016;231:15-30, according to the Korea Open Government License [22].

Table 1.

Examples of innovative healthcare delivery and payment models in the United States

Table 2.

Assessment indicators by the care quality assessment categories and weights

Table 3.

Weight for each care quality assessment category

Table 4.

Items audited in the health benefit appropriateness assessment program in 2017

Table 5.

Critical pathways developed by specialty and timing

References

1. Gerecke G, Clawson J, Verboven Y. Procurement: the unexpected driver of value-based health care Boston: Boston Consulting Group; 2015.

2. World Health Organization. WHO global health expenditure atlas [Internet] Geneva: World Health Organization; 2014. [cited 2017 May 1]. Available from: http://www.who.int/health-accounts/atlas2014.pdf.

3. Porter ME, Teisberg EO. Redefining health care: creating value-based competition on results Boston: Harvard Business School Press; 2006.

4. Kaplan RS. Value-based health care: reconciling mission and margin Boston: Harvard Business Review; 2015.

5. Jones R, Borsch M, Rubin J, Haider A, Noble A, Flynn T. Healthcare's Holy Grail: better outcomes at lower costs New York: Goldman Sachs Group Publishing; 2017.

6. Centers for Medicare & Medicaid Services. About the CMS innovation center [Internet] Baltimore: Centers for Medicare & Medicaid Services; 2017. [cited 2017 May 9]. Available from: https://innovation.cms.gov/About/index.html.

7. Medicare Payment Advisory Commission. Report to the congress: Medicare and the health care delivery system Washington, DC: MedPac Publishing; 2016.

8. ICHOM. What is ICHOM [Internet] Boston: International Consortium for Health Outcomes Measurement; 2017. [cited 2017 May 9]. Available from: http://www.ichom.org/.

9. Porter ME, Larsson S, Lee TH. Standardizing patient outcomes measurement. N Engl J Med 2016;374:504–506.

10. National Assembly Budget Office. 2015 Fiscal year settlement analysis synthesis [Internet] Seoul: National Assembly Budget Office; 2016. [cited 2017 May 1]. Available from: http://www.nabo.go.kr/Sub/01Report/01_01_Board.jsp?funcSUB=view&bid=19&arg_cid1=0&arg_cid2=0&arg_class_id=0&currentPage=0&pageSize=10&currentPageSUB=0&pageSizeSUB=10&key_typeSUB=&keySUB=&search_start_dateSUB=&search_end_dateSUB=&department=0&department_sub=0&etc_cate1=&etc_cate2=&sortBy=reg_date&ascOrDesc=desc&search_key1=&etc_1=0&etc_2=0&tag_key=&arg_id=5869&item_id=5869&etc_1=0&etc_2=0&name2=0.

11. Organization for Economic Cooperation and Development. OECD health data Paris: OECD Publishing; 2013.

12. Ministry of Government Legislation. Medical Service Act [Internet] Sejong: Ministry of Government Legislation; 2016. [cited 2017 May 1]. Available from: http://www.law.go.kr/engLsSc.do?menuId=0&subMenu=5&query=%EC%9D%98%EB%A3%8C%EB%B2%95#liBgcolor17.

13. Hwang H, Lee SS, Lee SH. Securing patient access to new medical technology under the diagnosis-related group system in South Korea: a review of foreign policies and selective reimbursement coverage programs for 4 major conditions. J Korean Med Assoc 2017;60:63–71.

14. Ministry of Health and Welfare. National health insurance expenditures in 2016 [Internet] Sejong: Ministry of Health and Welfare; 2017. [cited 2017 May 1]. Available from: http://www.mohw.go.kr/front_new/al/sal0301vw.jsp?PAR_MENU_ID=04&MENU_ID=0403&page=11&CONT_SEQ=338570.

15. Shin YS. Policy measures to stabilize health insurance finance. Health Welfare Policy Forum 2011;8:6–15.

16. Kang HJ. Provider payment systems in OECD countries and policy implication. Health Welfare Policy Forum 2014;212:75–86.

17. Lee SS, Salole E. Innovative medical technology, health technology assessment, and health policy: the case of remote patient monitoring of cardiac implantable electronic devices in South Korea. Telemed J E Health 2017;23:25–29.

18. Kang HJ. Restructuring of provider reimbursement methods for the value-based, patient-centered healthcare system. Health Policy Forum 2014;12:31–37.

19. Shin HW, Yeo JY. Health security and policy issues. Health Welfare Policy Forum 2014;207:5–16.

20. Ministry of Health and Welfare. Notification no. 2017-67 of the Ministry of Health and Welfare: amendment of the criteria for calculating care quality assessment support fund [Internet] Sejong: Ministry of Health and Welfare; 2017. [cited 2017 May 9]. Available from: http://www.mohw.go.kr/front_new/index.jsp.

21. Ministry of Health and Welfare. Introduction of patient-centric medical institution appropriateness assessment [Internet] Sejong: Ministry of Health and Welfare; 2017. [cited 2017 May 8]. Available from: http://www.mohw.go.kr/front_new/al/sal0301vw.jsp?PAR_MENU_ID=04&MENU_ID=0403&page=7&CONT_SEQ=338207.

22. Kang HJ. Current state and challenges of national health insurance. Health Welf Policy Forum 2016;231:15–30.

23. Ministry of Health and Welfare. The implantation plan of the 2nd Resource-Based Relative Value amendment [Internet] Sejong: Ministry of Health and Welfare; 2016. [cited 2017 May 9]. Available from: http://www.mohw.go.kr/front_new/al/sal0301vw.jsp?PAR_MENU_ID=04&MENU_ID=0403&page=23&CONT_SEQ=337789.

24. Ministry of Health and Welfare. The implantation plan details of the 2nd Resource-Based Relative Value amendment [Internet] Sejong: Ministry of Health and Welfare; 2017. [cited 2017 May 9]. Available from: http://www.mohw.go.kr/front_new/al/sal0301vw.jsp?PAR_MENU_ID=04&MENU_ID=0403&page=2&CONT_SEQ=339406.

25. Lee SS, Symonds D, Kamogawa S, Sato M, Chiang E, Salole E. Reimbursement coverage and pricing systems for single-use devices in Asia-Pacific: Japan, Taiwan, Korea, and Australia compared. Value Health Reg Issues 2015;6:126–129.

26. Ministry of Health and Welfare. Leading appropriate care in public hospitals through critical pathway development [Internet] Sejong: Ministry of Health and Welfare; 2016. [cited 2017 May 10]. Available from: http://www.mohw.go.kr/front_new/al/sal0301vw.jsp?PAR_MENU_ID=04&MENU_ID=0403&page=6&CONT_SEQ=339030.

27. Carlson JJ, Gries K, Sullivan SD, Garrison L. PHP146 Current status and trends in performance-based schemes between health care payers and manufacturers. Value Health 2011;14:A359–A360.

28. Lee SS, Salole E. Medical device reimbursement coverage and pricing rules in Korea: current practice and issues with access to innovation. Value Health 2014;17:476–481.

29. Lee SS, Choi H, Strachan L. Appraising the value of medical device innovation in South Korea: multi-criteria decision analysis application for reimbursement coverage decision-making. J Health Tech Assess 2015;3:90–98.

30. Larsson S, Lawyer P, Silverstein MB. From concept to reality: putting value-based health care into practice in Sweden Boston: Boston Consulting Group; 2010.

31. Kang HJ. The performance and evaluation of Korea healthcare system reform I Sejong: Korea Institute for Health and Social Affairs; 2016.

Article information Continued

This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (http://creativecommons.org/licenses/by-nc/3.0/) which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited.

Figure 1.

Table 1.

Examples of innovative healthcare delivery and payment models in the United States

Health care delivery and payment model	Description
Accountable Care Organization	Began in 2012 and coordinates the cares for a patient population and assumes financial risks and rewards A group of healthcare providers held accountable for the quality of care and the spends
	Designed to give the healthcare providers, within the fee-for-service frameworks, incentives to improve the quality and lower the costs
Bundled Payment for Care Improvement Initiative	Began in 2013 and examines whether the bundled payments lower the Medicare spends at the participating healthcare providers while improving or maintaining the quality of the care relative to the prior spends and quality data
	Designed to reduce the variations in outcomes and costs and to improve the processes in the planning, procedures and post-acute care phases. In the areas of orthopedics, e.g., hip and knee joints, and cardiology, e.g., percutaneous cardiac intervention, participating organizations assume the accountabilities on both the care performance and financials based on the episodic bundle payment for the 90 day period from the date of admission.
Comprehensive Care for Joint Replacement	Began in 2016 and examines the effectiveness of the bundled payments through the quality measurements for an episode of care associated with the knee and hip replacement surgeries Designed to improve the quality of the care and care coordination by the healthcare providers based on the payment continuum spanning over 90 days post discharge for the care givers, e.g., hospitals, physician offices, and post-acute care providers.
	Participating hospitals are held accountable for both the quality of care episodes and the costs. The hospitals receive bonus payments if quality thresholds are satisfied and the costs were below the spending target or vice versa. It provides hospitals financial incentives to collaborate with other care givers, e.g., physicians, nursing facilities, home health agencies, etc. to ensure coordinated care deliveries to the patients.

Reproduced from Centers for Medicare & Medicaid Services. About the CMS innovation center [Internet]. Baltimore: Centers for Medicare & Medicaid Services; 2017 [6]; Medicare Payment Advisory Commission. Report to the congress: Medicare and the health care delivery system. Washington DC: MedPac Publishing; 2016 [7].

Table 2.

Assessment indicators by the care quality assessment categories and weights

Assessment category	Assessment indicator	Weight
Care quality and patient safety (27 indicators)	Presence of the medical institution certificate No. of physicians per 100,000 inpatients No. of nurses per 100,000 inpatients	High
	No. of physicians per bed in both adult and pediatric intensive care unit No. of nurses per bed in both adult and pediatric intensive care unit Presence of the dedicated personnel for patient safety Presence of the reporting system on diseases at the point of admission	Middle
	Average number of outpatient per physician per day Dosage of prophylactic antibiotics for surgery Prescription rates for antibiotics Prescription rates for injectable medicine Visitors management system for the inpatients
	Presence of the quarantined sickbeds in the negative pressure facility Colorectal cancer Breast cancer Gastric cancer
	Lung cancer Pneumonia Chronic obstructive pulmonary disease Asthma No. of pediatric patients with severe diseases
	Rates of inpatients with rare intractable diseases Rates of high risk pregnancy at the time of admission
	Presence of the training and reporting systems for patient safety Whether to participate in the national surveillance system on healthcare associated infections Whether to participate in the surveillance system on the antimicrobial resistance	Low
	Whether to participate in the integration service program for nursing and care
	No. of days spent at emergency room Presence of the specialists at the neonatal intensive care unit	High
	Rates of the reimbursement claims on the inpatients with critical conditions	Middle
	Rates of the reimbursement claims on the outpatients with mild conditions No. of the emergency room patients per emergency room specialist No. of the emergency room patients per emergency room nurse Scores on the standard index for the admission of the severe emergency patients Presence of the delivery facility No. of inpatients per neonatal intensive care unit
Healthcare delivery system (7 indicators)	Rates of the inpatients with critical conditions Rates of the outpatients with mild conditions Operation rates of the adult and pediatric intensive care units Operation rates of the neonatal intensive care unit Ratio between the inpatient and outpatient Presence of the collaborative centers for care	High Middle
	Rates of transfer-out of the emergency patients
Education and training (8 indicators)	Ratio between the medical residents and patients Ratio between the teaching staff members and residents Ratio between the teaching staff members and care services Quality of the training environment	High
	Presence of the committee on resident education and training Degree of support on academic activities of the residents	Middle
	Training and recognition protocols for the residents Feedback mechanism on the training	Low
Research and development (5 indicators)	No. of physicians dedicated on research No. of intellectual property rights per physician No. of clinical trials	High Middle
	Presence of the center for the clinical trials Presence of the research and development fund	Low

Reproduced from Ministry of Health and Welfare. Notification no. 2017-67 of the Ministry of Health and Welfare: amendment of the criteria for calculating care quality asessment support fund [Internet]. Sejong: Ministry of Health and Welfare; 2017 [20].

Table 3.

Weight for each care quality assessment category

Assessment category	No. of assessment metrics	Weight
Care quality and patient safety	27	65%
Publicness	9	10%
Healthcare delivery system	7	10%
Education and training	8	8%
Research and development	5	7%
Total	56	100%

Table 4.

Items audited in the health benefit appropriateness assessment program in 2017

Total 32 categories		Total 55 items
Newly added categories	(2) Patient-centered care (1)	Patient experiences (1)
	Infectious diseases (1)	Tuberculosis
Ongoing categories (30)	Acute diseases (5)	Acute stroke, pneumonia, coronary artery bypass graft, ischemic heart diseases (acute myocardial infarction and percutaneous coronary intervention)
	Chronic diseases (5)	Hypertension, diabetes, asthma, chronic obstructive pulmonary disease, and hemodialysis
	Cancers (5)	Colorectal, breast, lung, gastric and liver cancers
	Drugs (8)	Prescription rates of the injectable medicine, prescription rates of the antibiotics, number of medicines prescribed, daily drug cost per patient, prescription rates of the multiple osteoarthritis antipyretic analgesics,^a) prescription rates of the antibiotics by
		class, rates of antibiotics prescribed for the pediatrics otitis media, and the rates of prophylactic antibiotics usage before 15 types of surgeries^b)
	Case payments (3)	Longterm care hospitals, reimbursed psychiatric services, and
	Diagnosis-Related Groups on 7 disease groups^c)	Diagnosis-Related Groups on 7 disease groups^c)
	Intensive care unit (1)	Intensive care unit
	Volume of cases in the 4 types of surgery (1)	Volume of cases in the 4 types of surgery^d)
	General quality (2)	In-hospital mortality rates and risk-adjusted readmission rates
Preliminary assessment and research Basic research	Preliminary assessment	Anesthesia, dentistry, and neonatal intensive care units Mid-/small-sized hospitals and mental health facilities

Reproduced from Ministry of Health and Welfare. Introduction of patient-centric medical institution appropriateness assessment [Internet]. Sejong: Ministry of Health and Welfare; 2017 [21].

^a)

The result from the pilot will be used to fine-tune the assessment system. The result from the pilot will be published in 2017 based on the 2016 data. Final result that will be published in 2018 based on 2017 data;

^b)

Surgeries in 15 categories, i.e., heart, craniotomy, gastric, colorectal, laparoscopic gallbladder, hip and knee arthroplasty, hysterectomy, cesarean section, prostatectomy, glaucoma, thyroid, breast, spine and shoulder surgeries;

^c)

Seven disease groups, i.e., lens surgery, tonsillectomy and/or adenoidectomy, hernia related surgeries, appendectomy, anal surgery, cesarean section, and uterine and/or adnexal procedures;

^d)

Four types of surgeries, i.e., hip arthroplasty, esophageal cancer surgery, pancreatic cancer surgery and stem cell transplantation.

Table 5.

Critical pathways developed by specialty and timing

Critical pathway developed	Specialty area	Year of development
Total knee arthroplasty Appendectomy Hernia	Orthopedic General surgery	Developed in 2014 and disseminated in 2015
Carpal tunnel syndrome	Orthopedic
Cataract surgery Hemorrhoidectomy Tonsillectomy	Ophthalmology General surgery Otorhinolaryngology	Developed in 2016 and disseminated in 2017
Variceal ligation and varicocelectomy	General surgery
Hip arthroplasty	Orthopedic
Transurethral resection of prostate	Urology
Colonoscopy polypectomy	Gastroenterology
Endoscopic submucosal dissection	Gastroenterology
Infectious diseases (tsutsugamushi disease)	Infectious disease
Acute coronary syndrome, angina pectoris	Cardiology
Pneumonia	Pulmonology
Asthma—acute attack
Urinary incontinence	Obstetrics and gynecology
Resection of ovarian tumor
Loop electrosurgical excision procedures
Stroke	Neurology
Cesarean delivery and newborn infants	Obstetrics and gynecology
Laparoscopic cholecystectomy	General surgery
Spontaneous labor and newborn infants	Obstetrics and gynecology
Repair of the ruptured shoulder rotator cuff	Orthopedic
Tuberculosis Percutaneous endoscopic gastrostomy Malaria Endoscopic sinus surgery	Pulmonology Gastroenterology Infectious disease Otorhinolaryngology	Will be developed in 2017 and disseminated in 2018
Septoplasty
Trigger finger	Orthopedic
Repair of the knee-joint meniscus
Reconstruction of the anterior cruciate ligament
Hallux valgus surgery
Percutaneous balloon kyphoplasty
Endorectal ultrasonography and biopsy	Urology
Hydrocelectomy
Endoscopic hysterectomy	Obstetrics and gynecology
Osmidrosis	General surgery
Herpes zoster	Internal medicine
Drug addiction	-

Reproduced from Ministry of Health and Welfare. Leading appropriate care in public hospitals through critical pathway development [Internet]. Sejong: Ministry of Health and Welfare; 2016 [26].