Implementation of value-driven outcomes program associated with reduced costs, improved quality

Fee-for-service payment models reward care volume over value. Under fee-for-service models, health care costs are increasing at a rate of 5.3 percent annually, accounted for 17.7 percent of the U.S. gross domestic product in 2014, and are projected to increase to 19.6 percent of the gross domestic product by 2024. Value-based payment models and alternative payment models incentivize the provision of efficient, high-quality, patient-centered care through financial penalties and rewards. Under alternative payment models, clinicians will theoretically deliver higher-quality care that results in better outcomes, fewer complications, and reduced health care spending. To implement alternative payment models effectively, physicians must understand actual care costs (not charges) and outcomes achieved for individual patients with defined clinical conditions -- the level at which they can most directly influence change.

Vivian S. Lee, M.D., Ph.D., M.B.A., of the University of Utah, Salt Lake City, and colleagues measured quality and outcomes relative to cost from 2012 to 2016 at University of Utah Health Care. Clinical improvement projects included total hip and knee joint replacement, hospitalist (physicians who practice in the inpatient setting) laboratory utilization, and management of sepsis. Physicians were given access to a tool with information about outcomes, costs (not charges), and variation and partnered with process improvement experts.

From July 1, 2014 to June 30, 2015, there were 1.7 million total patient visits, including 34,000 inpatient discharges. For total joint replacement, a composite quality index was 54 percent at baseline (n = 233 encounters) and 80 percent 1 year into the implementation (n = 188 encounters). Compared with the baseline year, average direct costs were 7 percent lower in the implementation year and 11 percent lower in the post-implementation year.

The initiative to reduce hospitalist laboratory testing was associated with 11 percent lower costs, with no significant change in length of stay and a lower 30-day readmission rate. A sepsis intervention was associated with reduced average times to anti-infective administration following fulfillment of systemic inflammatory response syndrome criteria in patients with infection (7.8 hours to 3.6 hours).

"Implementation of a multifaceted value-driven outcomes tool to identify high variability in costs and outcomes in a large single health care system was associated with reduced costs and improved quality for 3 selected clinical projects. There may be benefit for individual physicians to understand actual care costs (not charges) and outcomes achieved for individual patients with defined clinical conditions," the authors write.

Editorial: From Volume to Value in Health Care

Michael E. Porter, Ph.D., of Harvard Business School, Boston, and Thomas H. Lee, M.D., M.Sc., of Press Ganey, Wakefield, Mass., comment on the findings of this study in an accompanying editorial.

"The study by Lee and colleagues in this issue of JAMA is an impressive and important step forward, not just for the University of Utah Health Care system but for the rest of U.S. health care and other health care systems around the world that are focused on value. The findings offer proof of concept that improving value by patient condition can lead to lower costs and better quality -- at the same time. There is much to be done and the road is long, but the report by Lee and colleagues points out how the path begins."