The meanings of value

Source: NHE May/Jun 17

Professor Sir Muir Gray, director of Better Value Healthcare, considers the meaning of value in NHS commissioning for both the system and patients.

Hermeneutics is the name given to the academic study of documents with a view to understanding the use of language in them, sometimes resulting in the production of a concordance, a list of the frequency in which terms are used. Between the two documents on the Five Year Forward View, there was no increase in the use of term ‘quality’, but ‘value’ had four mentions in the original document and 16 in the Next Steps. However, the meaning of value is still a matter of debate.  

In the plural the term means principles, for example “this hospital’s values are diversity and openness”, whereas in the singular it is an economic meaning. To understand its meaning sooner, its economic meaning, it is necessary to set it in context. 

Increasing productivity and efficiency 

Productivity is a long-standing economist term relating outputs to inputs, for example the percentage of an operation that is done as a day care procedure or the proportion of prescribing a particular drug that is in the generic formulation.  

This is different from efficiency classically defined by Avedis Donabedian in 1980 as the relationship between outcomes and the resources used, not outputs but outcomes. For example, the proportion of people with hip replacement who felt that life was significantly improved by that operation.  

The emergence of value 

Donabedian can also be given credit for the development of the concept of value in healthcare, but its use in recent years has emerged both in the US and in the UK. In the US, value-based payments are all the rage and it relates the outcomes for the patients treated to the cost of their treatment. This is value in the American concept, but in a service like the NHS, which has to cover the needs of a population from a finite budget, what is measured and called value in the US would be called efficiency.  

In the UK we also have to ask other questions, such as: are there people not receiving treatment who are in greater need and would have better outcomes than those receiving treatment? And are there interventions of high value not being offered, whereas interventions of lower value are being offered? 

In shorthand, we can ask if there is underuse and/or overuse 

Thus, from the person responsible for delivering services to a population of people with, for example, headache or asthma or back pain or multiple conditions, services linked to the NHS need to move beyond efficiency and define value, whilst certainly including efficiency and productivity in that definition. 

There is, however, another dimension of the population definition of value, and that is allocative value, addressing the questions: 

  • Have the resources allocated to a population been used optimally to the principal populations in need, for example to people with cancer or people with mental health problems?
  • Within each of these programmes, for example within the programme for people with respiratory disease, are those resources allocated optimally to people with asthma or to people with chronic obstructive pulmonary disease (COPD) or to people with sleep apnoea?
  • Within the system of care for people with COPD are the resources allocated optimally for prevention to long-term care? 

Personalised value 

Finally, it is essential to complement these two population-based definitions of value with personalised value. Is the intervention addressing the problem that is bothering the person most? Do they really understand not only the benefits of treatment, but also the risks? And have they been given the opportunity to reflect how the benefits and risks relate to their values? 


The term savings should be used only when an organisation has been asked to control an overspend or reduce its core budget. CCG budgets are not being reduced and to achieve greater value all health services need a new agenda to deliver more high-value healthcare: 

  1. Optimising PERSONAL VALUE by ensuring that every individual is given full information about the risks and benefits of the intervention being offered, and relating that to the problem that bothers them most and to their values and preferences
  2. Optimising ALLOCATIVE VALUE by shifting resource from budgets where there is evidence from unwarranted variation of overuse and low value to budgets for populations in which there is evidence of underuse and inequity
  3. Optimising TECHNICAL VALUE by creating population-based systems that ensure:
  • Those people in the population who will derive most value from a service reach that service;
  • There is faster implementation of high-value innovation to improve outcomes, funded by reduced spending on lower-value interventions for that population; and
  • Increased rates of higher-value intervention within each system, e.g. helping a higher proportion of people die well at home, funded by reduced spending on lower-value care in hospital 

This is the new agenda. The publication of the new NICE guidelines on 1 April clearly marks the end of the era in which cost-effectiveness was the key criterion. We are now in the era of affordability, of opportunity cost as well as financial cost. Welcome to the era of value-based healthcare.

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