The Transformation of Healthcare: From Volume to Value


Even as politicians wrangle over the future of healthcare, new approaches are emerging at the grassroots level — and this is starting to push 21st-century healthcare from a volume-driven, high-tech, acute-care paradigm toward a value-driven approach oriented to wellness, prevention, and optimal outcomes.

According to IBM in its 2012 paper Redefining Value and Success in Healthcare, “There is dramatic energy to change, of a magnitude never seen before. … Healthcare transformation is happening right now, one hospital, one physician, one electronic health record at a time.”

Exactly what the emerging model (or models) will look like is unknown, of course, and getting to it will probably take decades. But IBM identifies numerous early signals that a fundamental shift is underway, heralding “an efficient and highly functioning [healthcare] system, designed around patients to deliver greater access, better quality, and lower costs.”


  • Fundamental transformation of the healthcare industry is being driven by industry players motivated to create a more cost- effective system.
  • Value will replace volume as the gauge of successful healthcare.
  • To stay competitive, healthcare providers and insurers will need to develop new competencies and change their value proposition.


To pave the way for reform—and survive in the new environment — healthcare organizations will need to develop new competencies. IBM details five, which it sees some healthcare organizations already starting to develop:

1. Collaboration and partnering. As care becomes more coordinated, patient-centric, and accountable, healthcare organizations will need to engage with other stakeholders in new ways. Successful organizations will:

  • Openly share risks, data, and ideas
  • Engage with a “win-win” mentality
  • Be willing to reconsider, redefine, and reinvent their role Besides enabling value-driven care, these changes will smooth the way into new markets and create new sources of innovation.

2. Information proficiency. McKinsey Global Institute has estimated that healthcare in the US alone could capture more than $300 billion per year by using data to improve efficiency and quality.5 Data will be central to every level of the value- optimized healthcare organization, from care delivery to medical policy-setting to strategic decision-making. Many organizations are already using data analytics to publish metrics at the point of care, where they can be used to inform action and change behavior, e.g., by correlating cost with quality. (For more on the growing importance of data to

3. Personalization of healthcare. Well before genetics becomes a meaningful enabler of personalized medicine, organizations will work toward “extreme personalization” at the service level—understanding each patient’s unique characteristics, service preferences, financial situation, health habits, and level of engagement in their own health. This will mean providing longitudinal and preventive care, rather than episodic and transactional care, and expanding access into more convenient locations and settings. “Regardless of the knowledge we may have of health, medicine, and technology, if it doesn’t fit into the patient’s world, it will never be effective,” IBM observes.


  • The grassroots movement toward a value-driven healthcare model described here is important for all businesses to appreciate and understand, if they are to participate and take advantage of the opportunities it affords. For organizations in the healthcare field itself, jumping aboard is likely to become a competitive necessity; as IBM notes, “The industry can expect a relentless pursuit to value that is being defined on an entirely new axis,” and companies that stay with the status quo will be left behind.
  • Companies need to understand that transparency is poised to pervade the healthcare field, and that those organizations that deliver genuine value will be rewarded, while those that don’t will be exposed. Asking themselves how ready they are for this world — including hard questions around medium- and long- term strategy, patient-centeredness, technical capabilities, hiring practices, and practically every other aspect of the business — should be the subject of strategic conversations in every organization.
  • Industry-wide transformation at this level carries a high degree of uncertainty. As described in the report, “Organizations will need to collaborate with unfamiliar business partners, attract and retain a different mix of talent, adopt new technologies, and in some cases abandon traditional sources of revenue.” Of course, each of these risks also carries a flipside of opportunity — potentially major ones. What this uncertainty makes clear is that both organizations in the healthcare field and those that interface strongly with it will need to be agile, continually monitoring the operating environment, staying current on consumer trends, and watching for new players and new technologies that could either threaten or enhance their competitive position.