Leveraging HEOR to Shape the Healthcare Landscape

By Christiane Truelove

In an era of unprecedented medical advancements, healthcare systems worldwide face a paradoxical challenge: delivering cutting-edge treatments while ensuring affordability and accessibility. Healthcare systems are struggling to deliver optimal medical care at reasonable costs. Factors such as labor shortages, aging populations with multiple chronic diseases, and expensive new therapies threaten the long-term financial sustainability of health systems. Moreover, the disparity in access to essential medicines between high-income and low- and middle-income countries highlights a critical health equity issue that demands urgent attention.

It's clear that one size doesn't fit all when it comes to healthcare systems and how to achieve the goals of better health and outcomes for all patients.

The World Economic Forum outlines 4 types of healthcare systems: universal coverage with a single-payer system (the Beveridge model); universal coverage with a multipayer system (referred to as the Bismarck model); the National Health Insurance model (which combines elements of the Beveridge and Bismarck models); and no national healthcare infrastructure (fully out of pocket). During the COVID-19 pandemic, all of these systems were stressed in the face of unprecedented demand. Discussions in the wake of the pandemic have focused on making health systems more resilient and better positioned to best utilize resources. The main challenge is even in economically strong countries using a universal healthcare system, there may not be enough resources to provide healthcare due to factors such as aging populations with chronic healthcare conditions unable to pay taxes or work.

Breaking down the systems: Beveridge, Bismarck, National Health Insurance, others
Under the Beveridge model, healthcare is funded by direct income tax deductions, with the majority of hospitals owned and operated by the government, and the state employing most healthcare staff, including doctors and nurses. The most familiar incarnation of this is the United Kingdom’s National Health Service, and the model takes the name of the economist Sir William Beveridge, who first established it in 1948.

“Approximately 76% of hospital beds in India are in the private health system and 24% within the government system.” — JK Sharma, PhD

This type of system is also found in Spain, Brazil, Cuba, and New Zealand. The main advantage of this type of system is by having the government as the sole payer, costs can be kept low and benefits standardized. However, because everyone can access the services, overutilization can create constraints such as timely access to healthcare staff and procedures. And in times of crisis, such as the pandemic, a decline in funding may exacerbate the financial burden created by additional patients.

The Bismarck model was created at the end of the 19th century by Otto von Bismarck. It is a decentralized form of healthcare where employers and employees fund insurance through mandatory payroll deductions. All money goes into “sickness funds” that are accessible to all employed, plus there are private insurance funds that cover every insured person. Countries that have this type of system include Germany, France, Belgium, the Czech Republic, and Japan. Health providers are generally private institutions, although the Social Health Insurance funds are considered public.

“When considering how to subsidize care for the population that is buying healthcare on an ‘as needed basis, India will need to decide whether to follow the UK or US model.” — JK Sharma, PhD

Because the Bismarck model is not a universal healthcare model and is geared towards providing benefits to the employed, those who are not employed or cannot contribute financially are overlooked. There are other strains as well. In Germany, the country is in the process of major healthcare reforms to tackle problems such as too few doctors (especially in rural areas), too many empty hospital beds, and too much financial pressure on hospitals. Among the proposals under Health Minister Karl Lauterbach are a two-pronged hospital reform under which hospitals will no longer be paid per treatment but get a guaranteed income for making certain services available. Officials hope this will alleviate the financial pressure on hospitals to book as many operations and treatments as they can and get people who need more complex treatment referred to specialists earlier. Not only is this expected to save lives, but also reduce health costs in the long run, as patients stand a better chance of being cured and are less likely to fall victim to mistakes caused by rushed and overworked hospital staff.

The National Health Insurance model combines elements of the Beveridge and Bismarck models. In this type of system, the government funds healthcare services, which are paid for through taxation, similar to the Beveridge model. The delivery of healthcare services is provided, however, mostly through private organizations, similar to the Bismarck model. Canada is the most notable example of this kind of system. Healthcare is funded and administered primarily by the country’s 13 provinces and territories, with each having its own insurance plan and receiving cash assistance from the federal government on a per capita basis. Benefits and delivery approaches may vary from province to province, but all citizens and permanent residents receive medically necessary hospital and physician services free at the point of use. Other countries using the National Health Insurance model are Australia and New Zealand.

The out-of-pocket/uninsured model means that there may be no organized healthcare system, or that private insurance is too expensive, and those who need treatment pay for it out of pocket. This system is found primarily in low-income countries that lack the resources to fund a strong healthcare system. Many countries in sub-Saharan Africa fall within this category, as well as rural areas in low-income countries where publicly funded or nongovernmental organization healthcare facilities are lacking.

A multimodel healthcare system: The United States
The United States has a fragmented healthcare system, as outlined by the Commonwealth Fund, in which funding and availability are dictated by type of insurance. For those on Medicare, the Indian Health System, and the Veterans Administration (VA) system, their healthcare is funded by the federal government; Medicaid is funded by the state governments. Medicare and Medicaid patients, however, receive treatment through private healthcare facilities and doctors, with these systems more in line with the National Health Insurance model, and VA and Indian Health Service patients receive their treatment through government facilities, in line with the Beveridge model. However, private and employer-, and employee-funded health insurance remains the predominant form of coverage. According to the Commonwealth Fund, two-thirds of Americans, or 67%, have private insurance as their health coverage as of 2018, However, the uninsured rate for adults aged 19 to 64 was 12% in 2018, down from 20% in 2010 when the American Care Act went into place.

“We also look at catalyzing policy change to make the right things to do easier to do.”— Jennifer Zelmer, PhD

As health systems worldwide grapple with sustainability and accessibility challenges, 2 contrasting examples—India and Canada—offer valuable insights into the complexities of modern healthcare. India’s healthcare system provides a compelling case study of the challenges faced by emerging economies. Canada offers a different perspective on addressing healthcare challenges, focusing on rapid adoption of proven innovations and policy changes to improve healthcare quality and safety.

Working to improve coverage
Health Coverage in India
According to JK Sharma, PhD, president and CEO of Andhra Pradesh Medtech Zone (AMZT) Ltd and a former head of health financing for the Ministry of Health, India’s healthcare system falls into a category similar to Thailand, where the government is working towards universal health coverage but does not have enough resources to take care of all of its citizens, at least not initially. “That leaves countries like India in a difficult position where they have to choose the manner in which they cover their people,” he says.

India currently has an “extremely robust” private healthcare sector and a “fledgling” public health sector, according to Sharma. He estimates that approximately 76% of hospital beds in India are in the private health system and 24% within the government system. For those government patients, the public sector provides nearly 45% of healthcare, and for patients in the private health system, the private sector provides 55% to 60% of care.

“One of the expectations is that we engage patients, families, residents, and others with lived experience in that work.”— Jennifer Zelmer, PhD

Patients in India generally fall into 4 categories. The first are those below the poverty line, making less than $2500 a year. The second are people above the poverty line who are either paying for private insurance or their employer is paying. The third comprises public government employees who can go to government hospitals and receive free care. The fourth—and largest—category is people who pay out of pocket and have no insurance. This category comprises almost 60% of patients.

Sharma says India’s government is not worried about people whose care is funded by the government. Instead, India is concerned about the patients who are not covered by private or government insurance and paying for care out of pocket. “When considering how to subsidize care for the population that is buying healthcare on an ‘as needed’ basis, India will need to decide whether to follow the UK or US model.”

Health economics and outcomes research (HEOR) can provide a “pragmatic way” to gather information so the government can make decisions on coverage. Although there are no data being gathered on the out-of-pocket population, “patients below the poverty line that receive government-funded care can generate evidence to determine which populations to cover in future,” Sharma says.

For example, India does not cover insulin for the treatment of diabetes; instead, patients buy it out of pocket. The country has some evidence from a systematic review that looks at what would happen if insulin pens are provided. Besides considering whether a government program should offer syringes (which are cheaper but are historically disliked by patients) or pens (which are more expensive but are easier to administer and safer), “should it cover people over the age of 50, which represents the biggest portion of the diabetic population? Should it cover people over the age of 40, which would include more people, or should it include patients who are 30 years old, which may even include type 1 diabetes?” Sharma asks. “We have the evidence from patients in the private sector and are looking at projecting that evidence for everyone and evaluating the budget impact.”

Innovative Approaches in Canada
Jennifer Zelmer, PhD, is CEO of Healthcare Excellence Canada, a nationwide charity that works with partners to spread innovations, build capability, and catalyze policy changes so that everyone in Canada has safe and high-quality healthcare. According to Zelmer, most of the organization’s efforts are focused on rapid adoption of proven innovations.

When it comes to innovation, the organization is not looking for technologies, but policy changes, program and model changes, changes in scope of practice, “whatever is required to improve quality and safety at the end of the day.” For example, Healthcare Excellence Canada is working with long-term care homes to support both stronger person-centered care and supporting and retaining the workforce in that environment. Another example would be safety-effective care transitions from hospital to home, to reduce the number of hospital readmissions, Zelmer says.

The HEOR community plays a crucial role in addressing these global healthcare challenges. Don’t just observe the changing healthcare landscape—shape it.

“We recognize that if we only work on innovation by innovation, we’re going to be at this for a very long time,” Zelmer says. Healthcare Excellence Canada aims to build capacity in the health system for effective engagement with patients and frontline workers, as well as strong leadership and governance. “Local teams can do amazing work, but if they’re trying to do that work in policy or structural contexts, that makes it difficult. They’re pushing water uphill,” Zelmer says. “We also look at catalyzing policy change to make the right things to do easier to do.”

All of these innovations need to be supported by evidence, and that means real-world evidence is “critically important,” and Zelmer expects the organization to “continue doubling down and using real-world evidence as part of the work that we do.” She adds that Healthcare Excellence Canada would be following the position set by Health Canada on Canada’s Drug and Health Technology Agency Guidance for Reporting Real-World Evidence that was made effective in 2023.

The organization also believes in working with patients to gather real-world data. “For instance, one of the expectations is that we engage patients, families, residents, and others with lived experience in that work,” Zelmer states. “We have a network of patient partners we work with and we work to build the health system’s capacity and expertise in being ‘engagement capable.’”

These contrasting examples from India and Canada highlight the diverse challenges and approaches in global healthcare. They raise important questions about resource allocation, the role of public and private sectors, and the importance of evidence-based decision making in healthcare policy.

Shaping the Future of Global Healthcare
The HEOR community plays a crucial role in addressing these global healthcare challenges. As experts in evaluating the economic and clinical outcomes of healthcare interventions, HEOR professionals are uniquely positioned to drive evidence-based decision making and policy formulation. Don’t just observe the changing healthcare landscape—shape it.

• Intensify research efforts in low- and middle-income countries to provide robust data for healthcare policy decisions.
• Develop innovative methodologies that can capture the complexities of diverse healthcare systems and populations.
• Collaborate across borders to share best practices and insights that can inform global healthcare strategies.
• Engage with policy makers, healthcare providers, and patient groups to ensure that HEOR findings are effectively translated into practice.
• Advocate for the integration of HEOR principles in healthcare decision-making processes worldwide.

By rising to these challenges, the HEOR community can play a pivotal role in shaping a future where innovative, accessible, and sustainable healthcare is a reality for all.