Thought leadership

The Intersection of Digital Health & Value-Based Healthcare

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October 13, 2022

Opportunities for the pharmaceutical industry

Considering the time and money invested in drug development, and the vast potential for innovative drugs to help improve patients' lives, it's more important than ever for drug manufacturers to demonstrate value. With the passage of the Inflation Reduction Act of 2022, the Centers for Medicare & Medicaid Services can now negotiate the price of certain high-cost drugs and penalize drug manufacturers who raise drug prices faster than the rate of inflation, possibly limiting patient access to certain drugs and curtailing future drug innovation.

Proving the value of drugs — especially shared value that benefits the patient, the healthcare provider, and the payer — is paramount in our evolving value-based healthcare system, which focuses on improving a patient's health outcomes relative to the cost of care.


A value-based healthcare system that provides the infrastructure and incentives for pay-for-performance (P4P) affords pharma the opportunity to plug-and-play with their value-based agreements and warranty offerings.


Because the adoption of value-based care means providers will be reimbursed based on outcomes, and given the rising costs of pharmaceutical product development, it's critical for pharmaceutical companies to demonstrate value by using digital health technology to augment clinical and administrative information in developing personalized evidence that supports differentiating and optimizing the value of therapeutics.

Defining value

There is no single definition of "value" in value-based healthcare. What's considered "valuable" can vary among stakeholders. Consequently, measuring the holistic value at the individual and population levels requires a multidimensional approach that considers a variety of metrics:

  • Clinical value, such as reduced medical errors and better care coordination
  • Humanistic value, such as improved patient satisfaction, experience, and quality of life
  • Economic value, such as reduced out-of-pocket costs from preventative care and efficient treatment
  • Social value, such as greater health equity

The digital health transformation

Encompassing hardware, software, and services for the purpose of coordinating and managing care, digital health technologies  — such as mobile health apps, electronic health records, wearable devices, telehealth, and telemedicine — can help increase value for all healthcare stakeholders. For instance, wearables can collect individualized real-world data to support innovation in care delivery and clinical research.

Leveraging wearables to gather comprehensive physical and behavioral user metrics can help identify those at risk of disease, improve treatment adherence, and enhance the overall patient experience. Digital data can also be used to measure patient-centered endpoints in clinical trials and observational studies to determine the salient factors driving real-world patient outcomes, enabling a true digital transformation in healthcare.

When digital health meets value-based healthcare

Digital technology can help enhance value-based healthcare by improving the efficiency and effectiveness of the overall patient journey as demonstrated in the following examples.

Cost savings through prevention: Sensors, wearables, and virtual assistants enable patients to measure their physiological and psychological symptoms further upstream in their healthcare journey, providing leading indicators that could trigger behavior changes or other interventions earlier in the natural history of disease based on data-driven monitoring.

Optimizing transitions: Healthcare providers are increasingly using digital technology to improve patient monitoring and engagement as individuals move through the healthcare system in real-time. This digital streamlining not only removes bottlenecks, decreasing the length of hospital stays and facilitating transitions to care at home, it vastly enhances the patient experience all along the way.

Improved measurement of long-term outcomes: Healthcare providers and other stakeholders can use digital tools to monitor patients remotely to better and more efficiently track patient outcomes to help improve adherence, resulting in faster recoveries and more durable effectiveness.

Opportunities for pharma

Pharmaceutical companies face increasing pricing pressure from policymakers, payers, and patients. Digital health technology equips the industry with innovative tools and data collection techniques to prove the value of their drugs and vaccines in traditional ways, such as through healthcare resource utilization reduction, as well as non-traditional ways, such as enhancing a patient's ability to enjoy life's experiences and achieve educational, professional, social, and personal goals.

Amplifying this novel measurement of holistic value at the individual level, digital technology and data science enable the measurement of value at the organization, community, and society levels so that macro benefits can be quantified as well. A value-based healthcare system that provides the infrastructure and incentives for pay-for-performance (P4P) affords pharma the opportunity to plug-and-play with their value-based agreements and warranty offerings.

Incorporating digital tools

Digital tools will help pharma align their P4P programs with all participating stakeholders by ensuring the patient's user experience is central to the design and operation of the learning system. Leveraging digital tools and therapeutics in a value-based healthcare system, pharmaceutical companies can overcome challenges to P4P by demonstrating the value of their drug therapies through the generation of real-world evidence of product safety, effectiveness, and outcomes, including patient compliance, equity, and quality of life.

Complementing traditional "active" data collection using clinical outcomes assessments and patient reported outcomes, digital tools provide a channel for "passive" collection of physiological symptoms, psychological metrics, and experiential data. Digital technologies offer pharmaceutical companies an opportunity not only to demonstrate the holistic value of their existing products but also to improve the development of therapeutics and vaccines using digital feedback loops, thereby catalyzing human-centered design in future innovation.

By fortifying a value-based healthcare system with digital technology to truly understand patients holistically — what they want and their physical as well as social and psychological needs — we will be able not only to improve the current state of healthcare but bring our understanding of "value" to a completely new level.


What Can We Help You Solve?

Exponent's multidisciplinary engineers and scientists are at the forefront of rapid development in digital technologies, including improved performance, safety margins, and usability. We help clients achieve their innovation goals by supporting the pharmaceutical product lifecycle from early-stage R&D to post-market quality control and monitoring.