Seeking Novel Value Creation Paradigms to Sustain Future Growth: The Case of Public Healthcare Policies

The current financial and economic crisis has strengthened cost-cutting policies. However, such policies are likely to be ineffective, particularly with regard to those that affect the healthcare system. It is clear that the financial value of healthcare systems is not consistent with their social and economic value. An innovative valuation model that reconciles both values is proposed. The current valuation models in the financial and accounting fields were evaluated critically, particularly with regard to the previous innovation and production models (the planned obsolescence and cradle-to-grave models, respectively). Two fundamental biases in the current financial and accounting models were identified (biases that affect the decisions of policy-makers). The first bias relates to the misrepresentation of an asset. The second bias relates to the fact that the current models do not adequately reflect the evolution of the innovation and production/re-use cycles. The proposed model offers a solution that eliminates the two biases.