Value-based management in long-term healthcare

A multidisciplinary team of Portuguese researchers is developing a value-based management model to be applied in long-term healthcare units.

Countries all over the developed world are currently struggling to cope with increasing healthcare costs. In the specific case of long-term healthcare, this is reinforced by factors on the demand side, such as the population ageing and the corresponding prevalence of chronic diseases. In this context, it is fundamental to act towards a reduction in morbidity due to chronic diseases, as well as towards an improvement in quality of life and attaining systematic cost efficiency.

One of the fundamental lines of action is the implementation of accurate models to measure costs and outcomes in healthcare, allowing improvement in both dimensions. Within the framework of cost-effectiveness analysis, the focus has recently been put on the relationship between costs and health outcomes, measuring what is considered to matter most: value created for patients, i.e., patient-centred health outcomes per monetary unit of cost. In order to embed this notion into practice, it is essential to enhance costing systems and to compare costs with relevant health outcomes’ measures.

Project goals

The ultimate goal of CARE4VALUE, a project developed by a multidisciplinary group of Portuguese researchers, is to enhance value creation (health outcomes per unity of cost) in long-term healthcare (LTH) providers. This aim relies on the achievement of four specific objectives:

  • Developing a value creation model, relating health outcomes and the corresponding costs;
  • Developing and implementing a multidimensional costing system, which allows computing cost by patient, by clinical condition, and by activity;
  • Assessing health outcomes, putting into practice agreed health outcomes’ measures (suited to LTH) and proposing additional meaningful indicators; and
  • Promoting benchmarking, with the purpose of identifying improvement actions.

The model is being developed in close co-operation with a local LTH unit, using a pilot project approach.

Expected results

This project has a problem-solving nature, which means that expected results are also practice-oriented. At the end of the project, the following results will be produced:

  • Integrated model, replicable to similar institutions, revealing the relationship between costs and health outcomes in LTH providers;
  • Developed and implemented multidimensional costing system;
  • Defined and operationalised set of health outcome indicators, specifically suited to measure patient (and family caregivers’) gains in LTH, per complexity level; and
  • Innovative, practice-embedded and patient-centred tools for data collection, including a mobile application to collect family caregivers’ data.

Results so far

So far, the team has been able to design and test the cost model, based on Time-Driven Activity Based Costing. TDABC methodology applied to healthcare allows the cost per patient to be identified for each clinical condition in the full cycle of care, mapping processes, activities, resources and allocated time.

The cost model was developed in iterative stages, in close co-operation with the clinical and management staff of the partner long-term healthcare unit. Mixed qualitative and quantitative methods were applied, involving: three focus groups and anonymised clinical data analysis to categorise different complexity levels of patients; structured observation of the full cycle of care; analysis of accounting records; and cost calculation per patient and activity.

Despite the difficulties found, mainly concerning the adaptation of the existing management accounting system to the requirements of TDABC, the implementation of TDABC in a real LTH setting proved successful, uncovering the cost per patient, according to his/her complexity level.

The following steps involve identification and operationalisation of outcome measures, suited for LTH patients and family caregivers, and integration of cost and outcomes data in order to develop a value-based management model.

Who will benefit

Although applied to a specific long-term healthcare unit, this model is replicable to similar units, promoting resource optimisation and, thus, economic sustainability of LTH providers. Additionally, by revealing value generated by monetary unit of cost per patient in LTH, this model generates valuable information for policymakers and funding-related decisions.

Finally, and perhaps most importantly, we expect to produce a positive impact on patients and their caregivers though the development and operationalisation of meaningful outcome measures for long-term healthcare patients, thus enhancing the effectiveness of care.


Professor Ana Lúcia Marto Sargento


Polytechnic Institute of Leiria (IPLeiria)

+351 244820300

Subscribe to our newsletter


Please enter your comment!
Please enter your name here

Featured Topics

Partner News



Latest eBooks

Latest Partners

Similar Articles

More from Innovation News Network