As healthcare systems worldwide grapple with rising costs and increasing complexity, value-based healthcare has become a critical framework for aligning resources with outcomes that matter to patients. But “value” means different things to different stakeholders—patients, payers, providers, and policymakers—which makes defining and delivering it both urgent and challenging.

The Global Payer Forum 2025 was created to address this challenge by offering a comprehensive, multi-stakeholder perspective on value-based healthcare. Organized by Alira Health in partnership with leading academic institutions, the event featured a three-part webinar series. This article focuses on key takeaways from the first session, “Paying for Value in Healthcare: Why, When, and How?”

It explores how value is defined in context, introduces the generalized risk-adjusted cost effectiveness (GRACE) framework for patient-centered value assessment, and details how outcomes-based contracts are used to manage uncertainty and improve accountability. It also highlights the growing role of patients in value decisions, the potential of value-based models in resource-constrained settings, and the critical distinction between health technology assessments (HTAs) and value-based agreements.

Defining Value in Healthcare Is Contextual and Multi-Dimensional

There is no universal definition of value in healthcare, and it varies significantly based on perspective. The diverse needs and goals of different stakeholders—patients, providers, payers, developers, and society at large—shape the concept of value. For instance, patients often define value in terms of improvements in quality of life, autonomy, and well-being.

There are four categories to frame the differences in value perceptions: allocative value (fair distribution of resources), technical value (efficiency in achieving outcomes), personal value (alignment with individual patient goals), and societal value (broader social and economic impact).

The diversity of interpretations reflects the complexity of modern healthcare systems and underscores the need for flexible frameworks in evaluating healthcare interventions.

The GRACE Framework: A Patient-Centered Paradigm Shift in Value Assessment

Professor Darius Lakdawalla, one of the Global Payer Forum 2025 speakers, introduced a novel framework he created to tailor value assessments based on disease severity and patient risk preferences. The GRACE framework was designed to address the limitations of traditional cost-effectiveness models, particularly the use of quality-adjusted life years.

GRACE introduces a more nuanced, patient-centric approach by acknowledging that a health gain is not equally valued by all patients. For example, a patient with late-stage cancer might value even a small improvement in survival more than a healthier patient would value a minor quality of life improvement.

The framework accounts for diminishing and increasing returns to health—a core concept in economics—and allows for the inclusion of risk aversion, severity of illness, and hope-based valuation (patients valuing a chance at a major breakthrough over average incremental gains). GRACE thus enables a more equitable and accurate way to assess interventions, especially for severe or rare diseases, and aligns value with real patient preferences.

Outcomes-Based Contracting: Mitigating Risk and Enhancing Accountability

Outcomes-based contracts link payment to real-world effectiveness and help align incentives while managing clinical uncertainty. This approach is particularly useful for high-cost, innovative treatments where real-world effectiveness may differ from controlled trial environments.

These contracts help mitigate risks such as poor adherence, subpopulation variability, or uncertain long-term effectiveness. Detailed clinical and financial analyses are used to determine the terms, including metrics, duration, and rebate thresholds.

Importantly, outcomes-based contracts are not always about cost savings, but about value assurance—ensuring that high prices are justified by high performance. If a drug does not perform, the payer is protected through rebates or refunds, creating a more accountable system that benefits both payers and patients.

Patient Voice Is Increasingly Included

The patient voice is increasingly included in assessments, but patients might still lack decision-making authority. While patient involvement in HTAs and value discussions is more common, it is often symbolic rather than influential. Many systems include patients or advocacy groups in advisory roles, but these roles rarely carry voting power or decisive influence over reimbursement decisions.

Patients’ unique insights—such as the emotional and practical realities of living with chronic or terminal illnesses—are crucial in shaping meaningful definitions of value. For example, measures like progression-free survival, treatment tolerability, and quality of life during therapy may be undervalued by policymakers but are often critical for patients.

Involving patients more substantively in discussions of trial endpoints, value assessments, and policy development will help create more equitable, person-centered health systems.

Value-Based Agreements Enable Access in Resource-Constrained Settings

Emerging economies can leverage value-based models to expand access responsibly. In settings with limited public budgets and large populations, value-based agreements can help introduce high-cost treatments (e.g., for rare diseases) by linking payment to verified outcomes.

These contracts support rational resource allocation, encourage investment in diagnostics and patient identification, and foster partnerships between government and industry. This is critical for expanding access while ensuring sustainability in low-gross-domestic-product-per-capita contexts.

Outcomes-Based Contracts Are Tools, Not Substitutes for HTAs

Value-based contracting must be built on robust, independent assessments. HTAs and value-based contracts serve different but complementary purposes.

HTAs provide a foundation of evidence and clinical reasoning, which must be independent of commercial interests. Value-based agreements, in contrast, are contractual tools to manage uncertainty and link payment to performance. Mixing the two can create conflicts of interest or misalignments. Clear separation of these roles is essential to ensure transparent, fair, and effective decision-making.

The first webinar of the Global Payer Forum 2025 underscored the growing need for more nuanced, patient-centered, and outcomes-driven approaches to defining and rewarding value in healthcare. From the introduction of the GRACE framework to practical applications of outcomes-based contracting and the evolving role of patient engagement, the session offered strategic insights for stakeholders aiming to design more sustainable and equitable healthcare systems.