Benefits of Health Literacy in Value-Based Healthcare

Person reading prescription bottle
Blog Posts  |  28 September 2020  |  By Amanda Cohen, MPH

Health literacy is an often overlooked, yet critical component of value-based health care systems. The degree to which a population is “health literate” can impact every level of healthcare. From patient outcomes in the physician’s office, to biopharmaceutical clinical research, to health plan and payer cost savings, health literacy is of utmost importance.

Every day individuals are faced with the need to understand health information, and with COVID-19 at the forefront, this need is ever-present in our society. In this article, we explore what health literacy is and why it plays a vital role in promoting value-based healthcare.

What is health literacy?

According to the Patient Protection and Affordable Care Act (ACA), health literacy is defined as “the degree to which an individual has the capacity to obtain, communicate, process, and understand basic health information and services to make appropriate health decisions.”1

In order for an individual to have sufficient health literacy, they should be able to comprehend each of these three components: 2

  • Print literacy (reading and writing)
  • Oral literacy (listening and speaking)
  • Numeracy (using and understanding numbers)

Health literacy comes into play any time an individual interacts with the healthcare system. For example, when picking up a prescription from the pharmacy, it is critical that a patient understands the dosing instructions on the medication label.

In this cautionary tale a Spanish-speaking man picked up his prescription for heart medication from the pharmacy. The dosing instructions were only partially translated, and the word “once” was left on the label. “Once” in Spanish means eleven, so instead of taking only one pill as directed, this patient took eleven. In this example, you can see how ignoring the implications of health literacy can significantly impact patient safety.

One important thing to remember is that health literacy is a two-way street. The onus is not only on the patient to understand what they are being told. It is also up to the health professional to communicate in a way that takes the level of health literacy into account.

Who does low health literacy affect?

The short answer to this question is, “everyone,” either directly or indirectly. As you can imagine, navigating the healthcare system with a low level of health literacy can be challenging. Yet, roughly 36% of American adults have low health literacy.3 Those with lower socioeconomic status or education, the elderly, individuals with low English proficiency, and those who receive publicly financed health coverage are disproportionately categorized with low health literacy.4

Health literacy is a key issue when considering the social determinants of health. Social determinants of health (SDoH) are the socioeconomic and place-based factors that influence a person’s health and well-being.5 One of the overarching goals in the U.S. Government’s Healthy People 2030 is to, “Eliminate health disparities, achieve health equity, and attain health literacy to improve the health and well-being of all.6

A traditional fee-for-service model of care pays physicians based upon the quantity of services provided. A value-based healthcare model, however, pays physicians based upon the quality of services. Value-based healthcare places a greater emphasis on improving patient outcomes. In short, a value-based healthcare model derives its value by measuring health outcomes against the cost of the delivery of those outcomes.7

Now that we’ve defined value-based healthcare, we can examine three areas of the healthcare system where health literacy and value-based care intersect:

1. Patient health outcomes

Because the goal of value-based healthcare is to improve patient outcomes, providers would be remiss to ignore the importance of health literacy. Research shows that individuals with lower health literacy tend to have poorer health and higher rates of hospitalization. Those with lower health literacy also typically make more trips to the emergency room, have lower medication adherence, and use less preventive care.8

On the other hand, if patients are better able to comprehend information about their health, they will be more likely to understand their diagnoses and comply with their care plan instructions. Improving health literacy contributes to more timely follow up appointments and increased medication adherence, thereby promoting improved patient outcomes.

2. Biopharmaceutical research

Going beyond the physician’s office, health literacy also plays a significant role in biopharmaceutical clinical research. Throughout the clinical trials process, it is critical that participants understand what is required of them. They should understand how frequently they should be taking their prescribed medication(s), and what steps should be taken to follow up with study administrators. The ability for study participants to understand the instructions provided can make a difference when examining a new therapy.

According to the Multi-Regional Clinical Trials Center of the Brigham and Women’s Hospital and Harvard University, health literacy principles can be applied to every stage of a clinical trial. From discovery, through recruitment and consent, during the clinical trial itself, and even after the trial is over, paying attention health literacy is crucial.

If biopharmaceutical companies consider health literacy throughout therapeutic development, they are more likely to get the right medication to the right patient at the right time. Paying careful attention to health literacy will ensure that therapies fit appropriately into a patient’s total care plan and that patients feel empowered regarding their health care.9 Achieving these goals will thereby contribute to a value-based healthcare system and support the overall objective of improved patient outcomes.

3. Health plan and payer cost savings

Not only can improved health literacy contribute to better patient outcomes, but it may also save money for patients, employers, and health plans. The inability for patients to successfully navigate the healthcare system costs employers and health plans billions of dollars in wasted costs.

One study estimates that when patients read health-literate educational materials and communicate their understanding back to their physicians, they are 32% less likely to be hospitalized and 14% less likely to visit the emergency room. This study also estimates a net savings of $675 per person, per year and an overall 11% reduction in healthcare costs.10 Other reports estimate that the financial impact of low health literacy may be as high as $238 billion, or 17%, of all U.S. health expenditures.11

Remember that value-based care places an emphasis on quality of care. Therefore, when large portions of a population are utilizing unnecessary healthcare resources including emergency room visits, hospital readmissions, and driving up excess administrative costs, patients are almost certainly not receiving the highest quality of care possible.

What is Veradigm® doing to promote health literacy?

As we mentioned earlier, improving health literacy is a two-way street. All participants in the healthcare system have an obligation to address this issue in order to improve quality of care. From healthcare providers, to biopharmaceutical researchers, to health plans and payers, each is a critical piece of the puzzle.

At Veradigm, we remain committed to health information technology and innovative solutions that make patient communication more effective, efficient, and literate. One way that Veradigm is dedicated to promoting health literacy and value-based care is with its prescription price transparency tool, Veradigm RxTruePrice™.

Veradigm RxTruePrice™ is designed to provide patient-specific prescription cost and coverage information during their health care provider encounter. Here is some data from healthcare providers on RxTruePrice:

  • 60% of Veradigm RxTruePrice survey respondents reported overall improvements in patient adherence to prescribed medications.12
  • More than 50% of respondents said Veradigm RxTruePrice has helped them reduce the amount of communication required between pharmacies and practices.13
  • 85% of respondents believe the ability to provide pricing and insurance information positively impacts patient satisfaction with their practice.13

Click the button below to contact us about how Veradigm® solutions may help to promote health literacy and value-based care in your practice.


  12. Results of Veradigm ePrescribe user survey conducted September 2019. Data on File.
  13. Results of Veradigm ePrescribe user survey conducted January 2019. Data on File.
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