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Value-Based Medicine

Brown, Melissa M. MD, MN, MBA; Brown, Gary C. MD, MBA; Sharma, Sanjay MD, MSc, MBA

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Evidence-based medicine has become increasingly important in clinical practice since the concept was introduced into health care by a group led by Gordon Guyatt at McMaster University. 1 Since the original publication in 1992, 1 the literature on evidence-based medicine had grown to more than 1,000 articles by 1998. 2 In essence, evidence-based medicine incorporates the best clinical research that provides the most reliable and reproducible information. Randomized clinical trials typically supply the best evidence-based data. Most often, these data are in numerical form, such as the improvement in vision from 20/70 to 20/40, the improvement of a cardiac ejection fraction from 30% to 40%, or the improvement from a stroke intervention from Rankin Scale 3 Score 3 to Score 2.

However, although evidence-based medicine identifies those interventions that give the best results in regard to numbers, the question can be asked, “what is the value of these numbers to the patient?” Most patients, not to say providers, would have difficulty measuring the relative value of health care interventions, particularly across diverse specialties such as cardiology and ophthalmology. For example, what would be more valuable to you if you were a patient: a three-line improvement in vision from 20/70 to 20/40 in the better seeing eye or a 10% absolute improvement in ejection fraction from 30% to 40%?

Value-based medicine measures this value across all specialties in medicine, using the data from evidence-based medicine as a foundation and ascertaining to what degree interventions improve quality of life and/or length or life. It is the natural extension of taking evidence-based medicine to a higher and more useful level. To date, measurement in the improvement of quality of life has been the more difficult of the two parameters comprising value, but utility analysis facilitates this endeavor. Utility analysis converts evidence-based data, something very difficult for many patients to understand, to value-based data, a language that patients can understand.

The fact that utility analysis can effectively measure value across all fields in medicine is particular appealing; as much as we would like to believe that all of health care revolves around ophthalmology, those in policymaking positions must take a broader view of all of health care. Consequently, tests such as the VF-14 4 or the NEI-VFQ-25, 5 both of which are primarily applicable to ocular health states, will likely have little applicability for those who decide health care policy at a broad level. Utility analysis transcends the gap between specialties.

Value-based medicine, in addition to quantifying the value conferred by an intervention, also has the benefit of incorporating costs with the value conferred by an intervention by using cost–utility analysis. It allows all stakeholders in health care to ascertain whether the dollars spent on an intervention are well spent. If we, as health care providers, ignore these costs, or the value received for the scarce resources expended, we will lose a major role in health care management, as has already occurred with managed care.

W. Edwards Deming is usually considered to be the father of total quality management, a strategy that has played a crucial role in the development of dominant business models in today's economy. Inherent in total quality management6 are the following concepts.

  1. The system should be driven by identifying and satisfying customer needs.
  2. Employees should be empowered so they can actively contribute philosophically and therefore maximize what is important.
  3. Benchmarks, or targets for which to shoot, should be established.
  4. Continuous improvement is a critical aspect for success.

There are remarkable parallels between total quality management and value-based medicine.

  1. As is the case with total quality management, value-based medicine is driven by satisfying customer needs. And a major need of the customer (patient) is understanding the value of the treatment he or she is receiving. To quote Scott Forsland, spokesman for Premera Blue Cross in the state of Washington, “What we want to do is change the game so physicians and consumers can make more informed choices about the cost and quality of care.”7 Without an information system such as that provided by cost–utility analysis, informed choice is exceedingly difficult, if not impossible.
  2. Value-based medicine empowers both patients and physicians. It is the utility values of patients with the health state that provide the “gold standard” for the quality of life associated with a health state, and it is the knowledge of clinicians using decision analysis and cost-effective analysis that allows amalgamation of these values into practicing medicine.
  3. Benchmarks can be readily established with value-based medicine. Cost–utility analysis has already been shown to increase the quality of care and moderate costs in New Zealand. 8
  4. Continuous improvement is critical for success with value-based medicine. Not only will new data from clinical trials be incorporated, but more sophisticated models of utility analysis and cost–utility analysis will be developed. By its nature, value-based medicine will be constantly changing for the better as more reproducible clinical and quality of life data are obtained.

The future of health care using value-based medicine appears to be remarkably bright. Not only will quality improve and costs moderate, but clinical advances will likely be further enhanced when we realize which interventions provide our citizens with the best value for the dollars they spend. There is little doubt that a society that judiciously expends its resources on endeavors that provide the maximum return will eventually surpass one that squanders its scarce resources. Value-based medicine will allow maximization of these resources for additional care and additional research. It will truly be the paradigm for health care in the 21st century.


1. Evidence-Based Medicine Working Group. Evidence-based medicine. A new approach to teaching the practice of medicine. JAMA 1992; 268:2420–2425.
2. Sackett DL, Straus SE, Richardson WS, et al. Evidence-Based Medicine. How to Practice and Teach EBM. Philadelphia: Churchill Livingstone, 2000.
3. Van Swieten JC, Koudstaal PJ, Visser MC, et al. Interobserver agreement for the assessment of handicap in stroke patients. Stroke 1988; 19:604–607.
4. Cassard SD, Patrick DL, Damiano DM, et al. Reproducibility and responsiveness of the VF-14. An index of functional impairment in patients with cataract. Arch Ophthalmol 1995; 113:1508–1513.
5. Broman AT, Munoz B, West SK, et al. Psychometric properties of the 25-item NEI-VFQ n a Hispanic population. Invest Ophthalmol Vis Sci 2001; 42:606–613.
6. Render B, Heizer J. Principles of Operations Management, 2nd ed. Upper Saddle River, NJ: Prentice Hall, 1997:89–113.
7. Health insurance prices to soar. USA Today, 8/27/01, p a1.
8. Braae R, McNee W, Moore D. Managing pharmaceutical expenditure while increasing access. The Pharmaceutical Management Agency (PHARMAC) experience. Pharmacoeconomics 1999; 10:649–660.
© 2002 Lippincott Williams & Wilkins, Inc.