At the recent World Health Expo Osaka, also known as Japan Health, I was listening to a talk on the difference between the “return of value” and “value-based outcomes” in healthcare.
At first, it sounded like different ways to say the same thing, but by the end of the session, I realised it was in fact a description of the fault line running through modern healthcare: how these two value systems justify their spending and how patients experience care.
After more than four decades practising medicine and sitting on hospital planning committees, I have watched these two ideas talked about, even more so lately, and interchangeably in boardrooms, budget reviews, and among my peers.
They are not the same thing, and if we don’t distinguish them, we can end up measuring the wrong thing or making flawed conclusions about cost and quality for patients.
Return of value (ROV) is very much like ‘return of investment’ except that it is looking at healthcare outcomes relative to cost. In considering ROV, we look at this question: given what we have spent, how positively impactful was the outcome?
For example, consider two hospitals treating 100 patients with Type 2 Diabetes.
Hospital A manages patients through frequent specialist visits, expensive medications, and regular high-cost testing. While these interventions lead to some improvement, patients’ blood sugar levels only improve mildly.
Hospital B, on the other hand, adopts an approach centred on primary care, cost-effective medications, and long-term patient education on lifestyle changes. As a result, patients achieve significantly better blood sugar control over time.
In this hypothetical comparison, although Hospital A spends more and delivers more services, Hospital B achieves better outcomes at a lower cost. This means Hospital B demonstrates a higher ROV, as it delivers greater health impact for every ringgit that is spent.
When assessing ROV, factors such as cost efficiency, operational effectiveness, patient outcomes, patient satisfaction and workforce productivity are typically considered.
Understanding ROV is important because it directly informs major healthcare decisions not just for hospitals per se but also for the healthcare ecosystem, such as whether to invest in new facilities like imaging suites, approve hospital mergers, or implement national screening programmes. Without a clear focus on ROV, healthcare systems could risk overspending or focusing on the wrong investments.
Value-based outcomes, on the other hand, are more patient-specific, looking at questions such as Did the patients’ condition improve? Did their quality of life improve? Did they have fewer symptoms or complications?
Unlike ROV, value-based outcomes speak the language of the consultation room, not the boardroom. They exclude the “noise” of cost accounting and focus instead on the one stakeholder who may be an afterthought in financial models, but the most important person in any healthcare equation, that is, the patient receiving care.
The talk in Osaka made me question whether these two measures of value in healthcare actually point in opposite directions, and if so, do we then have a problem?
Consider this. Take a hospital that adopts a new care pathway that shortens the length of stay and reduces readmission-related costs. From an administrator's ROV calculation, this looks like a clear win because it drives up efficiency, keeps costs down, and frees resources for other priorities. But if that same pathway discharges patients before they are truly ready, the value-based outcome for the patient may diminish.
The reverse is equally possible. Say, an oncology programme that invests heavily in a particular therapy with marginal but genuine survival benefit may show a low ROV in the short term but for the individual patient receiving it, it makes all the difference between surviving yet another year or having a significantly shorter survival.
In these cases, neither measure is wrong. Each answers a different question. The danger lies in using one to silently stand in for the other.
Healthcare systems across Japan and more broadly in Asia are entering a period where these opposing tensions could intensify, especially with the growing ageing populations and medical cost inflation, forcing all stakeholders to think in terms of cost efficiency. What the Osaka talk ultimately argued for, and what I would echo here, is not a choice between these two frameworks but fluency in both. Boards and administrators need ROV thinking to keep institutions sustainable and efficient. Clinicians and patients need to focus on value-based outcomes to ensure that financial sustainability is never achieved at the expense of patient care.
The healthcare leaders we need now will be the ones who can hold both languages at once so they can defend an investment in the boardroom, while never losing sight of whether a single patient actually got better because of it.
That, to me, is the real lesson from Osaka. I believe that value is not just one number or one definition in healthcare. It is an ongoing conversation between two questions, and we owe our patients the discipline of addressing both.
Datuk Dr Kuljit Singh is president of the Association of Private Hospitals Malaysia (APHM).