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Why don’t we talk about value in healthcare? We have an understandable interest in ensuring that there is an objective quality to the services we provide but we seem to put less effort into looking at the value that services create.

In some ways it is understandable, we still see quality through the lens of classical economic theory. The attempt to commodify healthcare assumes that every episode of delivery is consistent, in terms of quality, therefore is received equally. This objective truth of quality is sound in theory, but we all know that it doesn’t stand up to the complexity of the people that come into contact with services.

This traditional view also tends to see value as purely an economic marker that is released as service delivery is consumed by patients. The challenge is that the economic value released by delivering a service is arbitrarily set and doesn’t take any account of the individual value experienced by patients. In fact, patients play an insignificant role in determining the economic value of episodes of contact.

The lack of consideration of what value is delivered through services means that we miss an excellent opportunity for service improvement.

Treatment is not something that can be done to people in the abstract. There is always a need for agreement in the way that treatment is delivered. The point where treatment and patients work together is the real point that value is created.

The economic framework of service-dominant logic provides us with a very different mindset to understand what value is in terms of healthcare. The theory, developed by Stephen Vargo and Robert Lusch attempts to get away from the idea of markets and the exchange of goods; instead of seeing all economic activity as an exchange of service within service ecosystems.

This model provides healthcare with an opportunity to see the quality in a very different way. The most striking element of service-dominant logic is the realisation that value is only co-created by everyone involved in the delivery of a service. This is something we all know to be true in health delivery. Treatment is not something that can be done to people in the abstract. There is always a need for agreement in the way that treatment is delivered. The point where treatment and patients work together is the real point that value is created.

Another axiom of service-dominant logic, that should resonate with people in healthcare, is that value is always unique, and phenomenologically determined by the beneficiary. We know that patients don’t want treatment for the sake of treatment. They want the change in their life situation that treatment will, hopefully, deliver. Therefore, the value of a treatment is co-created by the patient and health provider and will be unique in each case.

Recognising the key role of co-created value highlights the benefits of a collaborative system.

Although this might seem like an interesting philosophical position to take, it also has practical benefits. By recognising how value works in service delivery we begin to build a more constructive relationship with patients. Because outcomes can never be anticipated, the change in value realised by beneficiaries provides a basis for learning. This is the key to building learning competency.

Recognising the key role of co-created value highlights the benefits of a collaborative system. Collaboration improves viability. Because increased communication highlights errors which can be learned from, therefore increasing efficiency.

We know that rapid changes in structures of society, demographics, ethnography and technology mean that what we understand about patients quickly becomes outdated. The first practical step we should take is to recognise that all services are only as good as the value proposition they make. When designing new services do, we really understand what it is that patients want to achieve? Do we understand what the core activities are (jobs to be done) that have caused patients to accept the value proposition offered?

This understanding cuts to the very centre of many of our most intractable health care issues. What is it about the value proposition that is offered by A&E that makes it more readily accepted than alternatives? What is the value proposition of public health? Do we miss an opportunity to influence healthy behaviours because we do not understand the value that people want to realise?

Generally, we don’t get a lot of opportunities to think about the motivation behind why people use services because the assumption is they need to in order to “get better.”

Simple value proposition activities can provide you with an opportunity to better understand the nature of the service you provide and help you to think about why people use it. This, in turn, helps to clarify whether or not you really are co-creating value.

As we better understand the value we create we also recognise that the safe delivery of that value is the true measure of quality. I would really like to hear from anyone that is interested in helping us co-create some value – send me an email if you’d like to find out more.


  1. Darren, An interesting blog. You mention 'When designing new services ...'. I think this is a key issue and requires a more formal approach in the NHS; where the points you have raised, and many other issues, can be considered 'up front' in the design of a service delivery. In the Back pain SIG we have been looking at a set of Service Principles for relevant service delivery. I have been doing a bit of research around the design of the processes required for the delivery of a service. It would appear that CCGs' contracts stipulate outcomes only and it is up to the provider to design the service delivery processes. If that is the case then who in the provider organization designs the delivery processes and what criteria do the have upon which they base their design other those outcomes?

    Clearly process design has to be able to cater for the requirements of individual patients, nevertheless a degree of process stability is required in order to embed new ideas, like the ones you talk about in your blog, without the loss of other key values of the existing process.

  2. Yes, you've got to the heart of the problem there. To what degree are services designed rather than purchased? I would say we're still very much in the realm of purchase rather than conscious design.

    It is a difficulty when contracts define outcomes because generally, they are unpredictable, almost certainly unattributable and in many cases not outcomes. But I take your point this has provided a degree of freedom in building a service.

    I believe that design thinking provides us with exactly the framework to build services that both deliver outcomes and can articulate the value that is created. Which is why I think the core of the commissioning process should not be setting outcomes but defining problems to be solved.

    If we iterate solutions to problems we get around the difficulties created by poorly defined outcomes, realising that value is co-created by actors that are not a party to the contract, inflexibility in contract delivery and contractual barriers to services integrating around an individual.

    This approach can provide system stability in a number of ways. Iterative design processes need to embed metrics at an early stage in order to prove validated learning. This gives empirical measurement but is also the device that can be used to stop/change services that do not provide value as quickly as possible. Some of this is about an honest negotiation of accountability that is specific to whether or not the service is working.

    Much of what I'm suggesting will probably need a more open business model that has more of an emphasis on how a service eco-system as a whole works rather than the simplistic binary approach to being a commissioner or a provider.

  3. Guest

    Mark Spurrell 3 years ago

    Hi. I was interested and pleased to see you drawing attention to value in healthcare. I've just completed a doctorate in value based healthcare with Manchester Business School. Out of the work, it is clear that there is work to do to take the important conceptual shift in service logic that you describe and to operationalise it for service users and practitioners in the field. To that end I have been working within the Learning Disability field in the North West on 'The Complex Case and Recovery Management framework' (CCaRM). This is a system for supporting the participants in the service to co-design service platforms for themselves, to drive what matters to themselves. We are just refining the system in the light of experience in use, but it would be good to hear about whether this chimes with any one else interested in value based healthcare.

  4. Darren, I'm still mulling over your blog. At the moment I'm focusing on your comment about 'core activities' and 'jobs to be done'. I do need to give a bit more thought to Outcome-Driven Innovation - following one of your links. I'd certainly like to learn more about your ideas for co creating value. Value is not only determined by the customer. Their are many more stakeholders that are also looking for value, particularly the people doing the job. It would be nice to have more detail on the work that Mark has done during his doctorate. Regards Tom

  5. Cheers Thomas.

    I believe you've got two things in there that are worth unpicking which I think are linked.

    I think the jobs to be done is probably the most important element that determines successful outcomes to interventions.

    A good, but simplistic example, is hip replacements. The lowest common denominator outcome for a hip replacement is that the hip is replaced and whether it functions or not. We have the PROMs that use things like the Oxford Hip score to evaluate hip function but these still don't get to the heart of what the job that needed to be done is and whether or not that job has been done.

    Taking a hip replacement as an example there are going to be an entirely subjective range of jobs that people need to get done. For example, being able to return to work or being able to go for a walk outside. These are the dominant factors over the motor function of the hip. How well the hip works is a byproduct of what people are trying to achieve.

    It's actually not a difficult thing to do to ask people what the job they need to do is and then test whether that job has been achieved. Though this presents the awkward issue that, as with every medical intervention, there isn't a standardised level of value that people are trying to realise.

    The other element is the co-creation of value. One of the problems with this is that it sounds a lot like co-production. It's not the same thing. Co-production is a conscious decision to enter into a production process with more than one party. Co-creation is unconscious. Recognising that value is co-created whether we intend it to be or not is probably the main thing I was trying to get across.

    Again, hip replacement is a good example of co-creation in practice. A hip replacement is not a one-off surgical intervention that concludes  at discharge with a functioning hip. The value is co-created by the surgical intervention and then how the patient reacts to the operation, engages with physical therapy and generally follows the post-intervention advice. The value is automatically co-created.

    If a patient refuses to do any post-operative exercise then a really low level of value is created, if they actively engage then a high level of value is created. If a patient has a supportive home environment that helps them to exercise then you have another element of value that has been co-created by another actor.

    The real outcome is where we recognise what the patient's job that needed to be done is and when that is achieved through the value that is co-created by the intervention, the patient and all other potential factors. This is important because it begins to explain why two, ostensibly identical, procedures can achieve different outcomes.

    With all of this, it doesn't really have an expectation that people behave or work in a different way. It's recognising that this happens already and this is a way of better describing it.

    I was thinking about following this post up with something about the difference between co-production and co-creation. I think it's a really interesting idea and something that can be easily lost in two terms that appear to mean the same thing.

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