Healthcare systems worldwide are at an inflection point. Rising costs, ageing populations and access to care have exposed the limits of traditional healthcare models. Many at the forefront of the industry agree that simply increasing volumes of tests, beds or procedures does not guarantee better patient outcomes.
In response to these global healthcare challenges, health institutions are moving toward a value-based model of healthcare; one that rewards outcomes, patient experience and long-term system sustainability rather than sheer activity.
What is value-based healthcare?
At its core, value-based healthcare reframes the purpose of care where success is measured by the improvements in patients’ health and quality of life delivered per dollar spent.
Unlike the traditional “fee-for-service” model, it incentivises volume i.e., more tests, more episodes, more billable items. In a value-based approach, incentives align with outcomes that matter to patients (recovery, function, experience) together with the efficient use of resources.
Moving towards a value-based healthcare model is not merely administrative. It requires redesigning patient care pathways, financing, measurement systems and cultures so that the best outcomes are meaningful for patients.
However, advocates and critics alike surface trade-offs and potential disadvantages of value-based healthcare. For example, it includes implementation complexity to transitional funding pressures.
Guiding principles for healthcare leaders: Lessons from Singapore’s Appropriate and Value-Based Care (AVBC) framework
In Asia, Singapore’s healthcare has built a reputation as one of the most robust and sustainable healthcare systems. The Singapore Ministry of Health has developed a practical set of considerations and guiding principles for healthcare players to transition to an Appropriate and Value-Based Care model.
1) Financing value-based models
The shift to a value-based financing system may be the toughest and fundamental challenge to overcome. The aim is to align payment with patient outcomes that encourage providers to deliver high-quality and cost-effective care. For example, it could come in the form of bundled payments, shared-savings arrangements, or service line budgets tied to patient outcomes. This inevitably requires healthcare providers to collaborate closely to design a finance model and system that supports and incentivises clinical and patient-centred outcomes.
With closer collaboration, it also motivates the healthcare industry to drive innovation and continuous improvement in healthcare delivery and administrative processes.
2) Outcome measurements: Prioritising Clinical and Patient-Centred Care
A value-based model is only as good as how rigorous its measurements are for its patients. For example, Clinical outcomes (i.e., complication and recovery rates) must be complemented by patient-centred measures such as Patient-Reported Outcome Measures (PROMs) and Patient-Reported Experience Measures (PREMs). This dual focus ensures that care delivery aligns with clinical effectiveness and patients’ priorities.
As with the state of measuring ESG and social impact, many healthcare systems still lack a standardised outcome measurement. Leaders must invest in defining clinical and patient-centric metrics. It requires a robust system to better measure, collect and analyse these data points. This also needs to be supported with an internal reporting system to promote accountability and drive improvements."
Dr Markus Karner
Academic Director
SMU Executive Development
3) Cost-effective interventions uptake
Value-based healthcare systems encourage the timely adoption of interventions proven to improve outcomes cost-effectively and discourage persistence on technologies or treatments that deliver low marginal value.
This requires robust health technology assessment, local piloting capacity to test innovations, and clear disinvestment pathways for low-value care. At both national and local levels, policies and evaluation frameworks need to be refined to gatekeep the entry and use of high-cost technologies.
"Healthcare providers’ procurement and prescribing practices should take into consideration the cost and subsidy status of health technologies," Dr Markus added. "Strengthening early awareness and reassessment processes is also crucial to prevent the entrenchment of ineffective technologies and to facilitate the disinvestment of low-value technologies."
4) Unwarranted Clinical Variation and Waste Reduction
Much of the opportunity in value-based models comes from eliminating unnecessary variation in care. By standardising evidence-based best practices and care pathways tailored to the local context, healthcare systems can ensure consistent care delivery while eliminating redundant or low-value interventions.
"Leaders should pair pathway design with provider education, decision-support tools and internal reporting to identify and close variation gaps," Dr Markus shares. This approach not only enhances patient safety and outcomes but also optimises resource utilisation, enabling reinvestment in high-impact areas.
5) Skills enhancement through education and training
Delivering value requires investing in new capabilities in an institution’s workforce. It spans from data analytics, interdisciplinary teamwork, care coordination and cost-conscious decision-making. Strengthening education and training equips healthcare professionals with the knowledge and skills to deliver patient-centred, outcome-driven care.
Healthcare professional education and postgraduate training should incorporate AVBC principles, promote interdisciplinary collaboration, emphasise cost-effectiveness, and encourage the use of data for decision-making. Embedding value-based care principles into medical and continuing professional education makes these competencies part of core clinical literacy rather than optional extras.
6) Culture shift toward value-based care
While the focus on the shift is heavy on the financing and measurement aspect, it should not be confused with being the only factors to success. Cultural change is important to nurture mindsets that prioritise patient outcomes, efficiency, and continuous improvement
Leaders play a vital role by sponsoring initiatives visibly, ensuring transparency through reporting, and creating incentives that reward long-term system health over short-term procedural volume.
What this means for healthcare leaders
The adoption of a value-based healthcare model should not be viewed solely as a technical or administrative exercise. It represents a strategic reset for healthcare organisations, reframing success as the achievement of sustainable and equitable patient outcomes."
"There’s no doubt that the transition is complex and context-dependent, with legitimate challenges, but the benefits are clear," Dr Markus added. "Systems that align incentives, measure what matters and redesign care around patient journeys can deliver higher quality at lower long-term cost."
For healthcare leaders ready to lead this transformation, SMU’s Hospital Management Programme equips decision-makers with the frameworks, tools and regional case insights to design and implement value-based solutions. Learn more about the programme and how it can help your organisation translate value into measurable outcomes.
Discover more of our bespoke SMU Executive Development courses and programmes.
