Towards value-based payments for joint replacement : a "Pay for Patient Value" (P4PV) model for Switzerland : from defining patient value to setting-up a financial and redistribution model

In Switzerland, elective hip and knee replacements account for substantial healthcare expenditures and are central to debates on quality, appropriateness and value-based care. Existing DRG-based payment systems for acute somatic care remunerate volume and case mix, but do not reflect quality of care. To address this issue, we developed a "pay for patient value" (P4PV) model for hip and knee replacements that links payment to what matters to patients, i.e. clinical outcomes, patient-reported outcome measures (PROMs) and indication quality. We first define "patient value" and measurable indicators of patient value that can be addressed by hospitals. Secondly, we design a budget-neutral financing mechanism to incentivize high value care and lastly specify a formula for redistributing payments based on the achievement of indicators representing patient value. For each step, we combined a targeted literature review with structured advisory processes involving surgeons, hospital managers, specialists from Groupe Mutuel (GM), and registry experts. Existing Swiss datasets and quality initiatives and international experience informed indicator selection, thresholds for bonus assignment, financial re-allocation and payment design. Structured advisory meetings validated the model propositions. The proposed model defines and measures quality according to three dimensions: (i) clinical outcomes, measured as hospital-level risk-adjusted 2-year revision rates; (ii) PROMs, initially measured via participation and 12-month response rates for EQ-5D-5L, Oxford Hip/Knee Scores and a satisfaction question, and subsequently additionally according to meaningful improvement thresholds; and (iii) indication quality, as documentation of shared decision-making via a checklist or equivalent. The budget-neutral financing mechanism is made up of two parts: a 2% withhold on DRG-based payments for hip/knee replacements pooled with 50% of the health insurer's estimated 1-year post-operative cost savings. This pool is redistributed using a weighted model: each hospital receives a composite quality score (40% revision rate, 20% PROM participation rate, 20% PROM response rate, 20% shared decision-making), scored with three-tier thresholds (0/50/100%). Thus, participating hospitals receive a payment relative to their performance in each dimension and the performance of other hospitals. While their performance is calculated based on all patients, payments are only made according to share of patients insured at participating health insurers. The P4PV model offers a framework that takes joint replacement patient value into account by adjusting payments based on clinical and patient-reported outcomes, as well as shared decision-making, while remaining compatible with existing Swiss registries and payment systems. It directs incentives from volume towards patient value, remaining budget neutral and ensuring scalability. Implementation will require legal clarification of contracts, investment in PROM measurement and shared decision-making infrastructure, coordination with cantons and other insurers. For ease of introduction, a shadow invoicing phase is envisaged to prepare hospitals ahead of full rollout and test the willingness of hospitals and insurers to invest in the P4PV model.