In Value-Based Healthcare, What Role Do MedTech Companies Play?

Updated on March 26, 2023

Value-based healthcare (VBHC) systems align payment and delivery systems by rewarding value over volume. That value is measured in terms of patient outcomes relative to the money spent to achieve those outcomes. 

Due to rising costs in most healthcare systems, organization leaders are adopting new value-based payment and delivery systems to curb costs and improve quality.[i]

Many healthcare systems have instituted value-based purchasing systems, integrated practice units, care coordination models, and risk-sharing agreements to move to comprehensive outcome-based models/approaches. In the U.S., Accountable Care Organizations represent an early attempt at developing integrated care systems in which overall payment is based on a defined patient population’s health outcomes.

A medical device company like Olympus, where I work, is mindful of these developments, but deciding how to be a part of the conversation is not always easy. We don’t know how our work for relevance in the VBHC direction(s) will pan out – so many legislative, societal, and even behavioral factors come into play. If we over-emphasize VBHC models only to have them go out of favor, could that hurt our efforts toward product innovation and adoption?

Right now, fee-for-service still rules the day, and we must work within those parameters. In fact, technologies that are a good fit for VBHC can sometimes languish in a fee-for-service context. We have seen firsthand how some Olympus technologies that have been shown to have significant clinical value suffer low adoption levels, partly because there isn’t a defined incremental payment rate  available.

No fee, low incentive 

For example, a urologist using our Narrow Band Imaging (NBI) technology is required to do little more than push the NBI button to gain a different view of the anatomy of a bladder cancer patient. For years, research has shown that NBI improves the ability, compared to white light, to see bladder cancer tumors by 24-28%, depending on the type of tumor.[ii] The technology is built into the processing units for many Olympus cystoscopes commonly used by urologists.[iii]

But without the incremental payment rate or a defined reimbursement code, physicians have a lower incentive to learn and employ this important visualization step. To improve the certainty that training is pursued, there must be an economic benefit to match the incremental clinical benefit.

This is precisely the type of issue that public health, healthcare economics, and healthcare policy experts are trying to address, and it is closely tied with VBHC. Since so much of medicine is still fee for service-(FFS) based and VBHC models are not yet widespread, it may be incumbent upon us, the medical device providers, to look for a way that physicians can be reimbursed for procedural steps such as pushing the NBI button. We are put in an interesting situation. How and where do we keep pushing on both the VBHC and fee-for-service fronts?

Navigating the future of VBHC and MedTech

At Olympus, we are looking at ways to integrate VBHC strategies meaningfully into our marketing and selling. Some examples of this might be:

  • Conduct a data study prior to launching a new product: A significant challenge is that healthcare information is available but often not linked together. Healthcare utilization information, for instance, is not related to technologies and vice versa, and the durability of the data is limited when it comes to tracking long-term impact. U.S. health utilization information is fragmented (technology, facility, professional, lab, and diagnostic utilization are not linked), so creating a value proposition is challenging. But without data studies to provide proof points on our product utilization (and other factors) where possible, along with evidence of gaps that could be addressed, the obstacles to VBHC will only worsen.
  • Act on the conducted data analysis and create solutions/recommendations for using data to influence the standard of care: for example, propose that facilities provide utilization information to the device company, so that action can be taken when there are gaps.
  • Commit to exploring the VBHC value proposition so that the sales team can speak to both the fee-for-service customer and the VBHC customer.
  • Know our stakeholders: The value to physicians will be different from the value to hospital administrators, which is different from the value to payers, and patients. We aim to understand what value we bring to each of these and others as we build out our VBHC models for each new product launch or business decision.
  • Implement a VBHC delivery and payment system to accept payment for our products and services contingent upon our ability to improve patient outcomes relative to the healthcare system’s cost.
  • Develop or improve upon tools that facilitate communication with physicians, understanding that the performance of our devices is closely connected with patient outcomes and experience.
  • Develop tools to allow the healthcare provider to engage patients to understand their satisfaction levels after procedures that use our devices. Patient satisfaction is essential as care revolves around the patient quality of life and improved outcomes — at a reasonable cost.
  • Make VBHC data gathering part of our real-world data strategy, learning how our products and services deliver clinically once they have been commercialized and also how they deliver all along the value chain. Understanding this real-world data can help us identify saved healthcare costs and the health status of the communities served by our customers.

Longer lives and limited resources

While shifts occur, I believe it’s our responsibility to market both to the fee for service and the value-based customer. And this is not easy. But for those products we sell that have VBHC benefits – and I believe this is most of them – the story should be told convincingly to the range of customer stakeholders.

People are living longer and shifts in the healthcare industry mean that we often serve them with limited resources – a limited number of hospitals, physicians, and shortages among some specialties. We must think about how our technologies can help solve limitations and how they can create value for overall population health. 


[ii] Li, K., Lin, T., Fan, X., Duan, Y., & Huang, J. (2013). Diagnosis of narrow-band imaging in non-muscle-invasive bladder cancer: A systematic review and meta-analysis. International Journal of Urology, 20, 602-609.

[iii] NBI is not intended to replace histopathological sampling as a means of diagnosis.

Paul Skodny 2891
Paul Skodny

Paul Skodny is Executive Director, Health Economics and Market Access at Olympus Corporation of the Americas.