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Health Innovation

The pursuit of value: Where are we going?

  • Dr. David Barrett
  • |
  • Jul 22, 2019
The pursuit of value: Where are we going?

The delivery of healthcare usually requires the utilization of a complex, dynamic system of multiple components; a systemic strategy defined as “not a random collection of individual building blocks, but a carefully constructed system of independent parts” (Collis & Montgomery, 1988, pg. 72). Such a strategically designed system’s proficiency to maximize the efficient and effective use of its resources is largely governed by the ability of these various components to interact in a coordinated and co-operative manner across the continuum of value generation. Essential to that proficiency is an agreed upon comprehension of what the system’s objective is, so that the system can optimally align resources and efforts in pursuit of that objective – that begs the question, what is value?

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“Firms exist to create value for others where it is neither efficient nor effective for buyers to attempt to satisfy their own needs” (Smith & Colgate, 2007: 7). Through the utilization of an external value orientation, an organization can purposefully select and combine resources and capabilities into an operational system designed to create more viable value offers for new or existing customers (Sirmon, Hitt & Ireland, 2007). Through interactions with the organization, consumers will seek to satisfy personal needs and extract value from the operational system through increased utility, lower prices, or ideally both (Cox, 2004).

In establishing a value generating enterprise, it is important to ensure that value, as defined by the end consumer, is well understood, or resources deployed and investments made in pursuit of creating perceived value (from an organization’s perspective) will not achieve the desired or predicted organizational benefits. In a healthcare context, the application of a value-based approach is about maximizing patient benefits (outcomes and experiences) while minimizing the consumption of resources used to achieve those benefits (Porter & Lee, 2013). Thus, central to the successful deployment of value-based healthcare approach is to correctly define the concept of value from the patient perspective (vs. supplier/provider perspectives), and to subsequently design and manage an operational system capable of delivering on that definition of value. This perception of value, and how it is defined and understood by the user and the provider, make for more complex managerial choices (Cox, 2004) and investments in the requisite value generating resources and capabilities.


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September 20 & 21: Module 1 – The Fundamentals of Value-Based Healthcare

October 18 & 19: Module 2 – Measuring Effectiveness: Patient Outcome Measures

November 15 & 16: Module 3 - Designing and Managing Cost-Efficient Care

December 13 & 14: Module 4 – Driving System Performance: How to Implement Change