Patient Value Driving Change

By Dr. Zoltan Lantos, Client Management Director

Developed countries have been struggling for some time with increasing twofold cost pressure on their health care systems. On one side, procedure volumes are rising because of the greater medical needs of the aging; on the other side, unit values have increased with the cost of improved medical technologies and procedures. To cope with these cost pressures, health care reforms have mainly focused on reduction of the reimbursement. This measure is usually referred to as cost containment but has little correlation with the real cost of a procedure or intervention, rather, only reflecting the expenditure of the reimbursing body. As a result of these financially based actions, the expression of health care reform has become equal to superfluous combat.

Meanwhile, for practicing physicians, with their knowledge of medical procedures and their own curative experiences, the clear need for patient centricity has become ever more obvious. In 1993 Harvard Medical School with the Picker Institute (Gerteis 1993) formulated the characteristics of a well-functioning, patient-centered care system. For more than a decade, however, this concept couldn’t gain traction in medical practice until Michael E. Porter and Elizabeth Olmsted Teisberg published their epoch-making book, “Redefining Health Care,” in 2006. The book’s subtitle, “Creating Value-Based Competition on Results,” concisely reflects the essence of the new foundation of modern health care. It is creating value at the level of patients as end users – value that is measured by results on patient health.

Value creation is modeled by the health-sector specific Care Delivery Value Chain, which describes all value-creating process elements and their interconnections. One of the most revolutionary aspects of this approach is that care and health value generation is unambiguously regarded as a process created from interrelated, linked and harmonized actions. By now we know that the old intervention-based health care approach is not able to serve the real medical needs, and there is growing evidence for the societal deficit of unsatisfactory prevention, diagnostic procedures, rehabilitation and monitoring – all necessary elements of the health value generation.



Porter, M.E., Teisberg, E.O. (2006): Redefining Health Care, Harvard Business School Press, Boston, Massachusetts

In the new health care, activities are based on the care process and health value-generating projects, rather than medical interventions, with the clear consequence that sole interventions are losing their values, even at the risk of becoming mass products.

Result – or many times referred to as outcome in the pharmacoeconomic practice – should always be defined on the patient level. The result as value of the care can be objective – determined by any medical measurement, usually a functional value of the cared organism. Or it can also be subjective as improved health perception of the patient. Our measurement ability is also increasing in this latter respect; different quality-of-life instruments help us make this personal health perception tangible. However, we need to better understand correlation of the functional and perceived health value, which would bring us closer to the generation of higher patient health value.

Another extremely important aspect of the new approach is that the real result of any kind of health care provision or product is the generated patient value. For a vast majority of diseases and health problems this kind of value can only be achieved by active contribution of the patient. As a result, patient decisions are much more appreciated, and the health value-generation process should also focus on the patient’s decisive role. Thus patients become consumers of any health goods.

The Care Delivery Value Chain also helps us reengineer health value generation as a process conforming to patients’ lives. Until now there has been confrontation between the intervention-based functional goals of the health care provisions and the subjective experiences of the patients who are always in a process of living their own lives.


Zoltan Lantos: Integrated Health Economy Model


Real health value generation should support the life of a patient rather than solely intervene for the improvement of her functions. This way the new health care would become a more person-based service area relying on interpersonal activities and losing the tight system-based approach that is now inhibiting the curative relationship between care personnel and patients.

The new value-based approach also means that all services and products with the ability of health value generation constitute an integrated health economy market. The converging markets of the food industry and pharma have been widely cited and expressed in nutraceuticals and functional foods among others. We can also see this market evolution in Philips’ focus on the health market, Procter & Gamble and Teva Pharmaceutical Industries' establishing a joint venture, and telecom industry innovations in e-health and mobile applications for healthy lifestyles, just to mention a few.

The integrated health economy market brings not only new competitors, the number of opportunities for health value-generating cooperation is also multiplied by order of magnitude. The collaborations could provide new business opportunities for many existing players and newcomers as well.

What does the changing health environment mean for the pharmaceutical industry? Clearly a great many new opportunities since the health economy market is rapidly expanding. But companies need to deeply and swiftly transform in order to leverage their already acquired medical and market knowledge. In the new, process-based health value-generating era the old intervention-based business model is clearly an obstacle to success.

Among chemical entity-based pharma products that are good examples of medical interventions we are already facing strong devaluation. Patients and states are only willing to pay the value of a mass product as a simple, interchangeable element of a value-generation process. Because the traditional pharma business model is based on selling interventions, and has little influence on the healthy life-supporting value generation, the old system needs to be transformed with a new approach that is more open to patient decisions and patient-centered collaborations.

There are several new ways of getting connected to the health value-generation process, thus plenty of new opportunities for the new business model transforming the pharma industry. The implementation of patient value focus can be limitless; however, the procedure of the new business model design can be characterized by a few steps.

The new business model is consumer focused rather than medical science oriented, thus medical knowledge and performance ability must be leveraged by deep consumer insight, a wide collaboration network and flawless process design.

For consumer insight, different types of observations, such as ethnography and exploratory group projections, can give the necessary information to determine the health value matrix a provider wants to pursue in its therapeutic fields and patient groups.


Health value matrix as basic for the Care Delivery Value Chains of the company


The major driver of this health value matrix is patient insight, as the ultimate goal is to achieve a health result valuable to the patient. This is the area where pharma companies have the largest room for improvement, with unprecedented new business opportunities such as additional personalized electronic consultation in a chronic disease where the perceived value comes from the information not the drug.

Available resources are used for the company’s health value-generation process and the engineering is based on the Care Delivery Value Chain. Each company’s own value-generating process as part of the whole value chain is fitted to other players’ contributions, resulting in a patient value-driven collaboration network.

These well-established values can be best conveyed to consumers through patient-centric branding using integrated verbal and nonverbal communication, focusing on health experiences of the values delivered rich in emotions and sensations.

The company strategy and operation would then be built on all defined value chains, which should be reflected in the company culture with the positioning structure and hierarchy; the organizational structure with external relationships and cooperation networks; and in internal beliefs with the marketing concept.

This process-based operation would be best supported by a health value-oriented balanced score card as a management tool backing the well-established consumer-centered strategy.