Measure Outcomes & Cost for Every Patient

Outcome Measurement

Standardized outcomes, transparently reported by condition, are essential for both care improvement and for making informed choices by patients, payers, and other provider organizations. Outcomes represent the ultimate measure of quality.

The outcomes of care are important information for patients so that they can make informed decisions about where to receive care and who should be providing it. They also should define the success of physicians and provider organizations. 

When there is effective multidisciplinary care, outcomes provide data for improving performance. They are also essential for value enhancing efforts at cost reduction since when costs are reduced one must be sure that outcomes are not made worse. Outcomes are also essential parts of value based payment plans like bundled payment. In regional and national expansion of delivery organizations, they are important in determining how to provide the right service in the right location. They also inform choices about service line growth and areas for affiliation.

In today’s health care delivery systems many things are measured and reported yet most are surrogates for patient centered outcomes. Process measures are often used in health care quality assessment, yet these, while often easy to measure, do not always correlate with clinical outcomes. Similarly, structural measures, patient experience, and other indicators are often substituted for outcomes.

There are several basic principles of outcome measurement. The first is that they must be measured for the medical condition or segment of a primary care population. Outcomes for a condition are always multidimensional and include what matters to clinicians and patients – patient reported outcomes form an essential component. The outcomes cover the full cycle of care for the condition and include risk adjustments for the severity of the disease and the underlying condition of the patient.

The multidimensional aspect of outcome measurement is captured in the outcome measurement hierarchy where clinician and patient reported outcomes are captured in three tiers. Tier one represents survival and the degree of functional status achieved. Tier two represents the process of recovery including complications problems encountered in the treatment process. Tier three represents the long-term sustainability of health achieved including clinical and functional status.

The Outcome Measures Hierarchy

The first step in developing outcome measures is to define what to measure, who the stakeholders are including patients, and to set up a multidisciplinary team with an influential leader. Measures, risk adjustments, and validated survey tools for PROMs need to be identified. Until recently, having full sets of outcome measures for clinical conditions a was major limitation to implementing this part of the value-based health care agenda. That was changed in 2012 when leaders at Harvard Business Sschool, Boston Consulting Group, and the Karolinska Institute came together to form the International Consortium for Health Outcomes Measurement (ICHOM). ICHOM brought together clinical leaders and patients in over 25 conditions worldwide to develop and lead the implementation of outcome measure sets. ICHOM’s pioneering work has captured the attention of clinicians, provider organizations, governments, and other payers.  

Data collection is a key next step and ideally should be captured in the course of the care delivery workflow. Once the data is captured, it needs to be risk adjusted for co-morbidities and severity of disease for comparison to registry and other benchmarks. The data needs to be periodically openly reviewed and, through a frank discussion of results, identify ways for improving the outcomes and leverage best practices. When combined with care cycle cost data, opportunities for value improvement become clear and achievable. Reporting outcomes begins locally with involved providers in a non-judgmental manner. Over time, reporting can be expanded to other providers and payers. Public reporting can lead to informed patient and payer choice in the selection of providers.

Current barriers to outcome measurement lie in the tremendous resources already committed to other quality measurement activities. The longstanding focus on process measures has slowed the development of clearly defined standardized outcomes at the medical condition level. Additional barriers include IT systems that do not support outcome measurement and limited incentives to use outcome measures.

Overcoming those barriers involves implementing the standardized ICHOM measure set and developing the IT systems to collect and manage the data. Ideally, this should occur in the patient care workflow and not require additional effort on the part of already busy clinicians and other front line providers. Use of these measures in a payment system will also accelerate their implementation.

Cost Measurement

Accurate cost measurement is essential to optimize value in health care. Currently health care accounting systems do not measure the costs of treating patients over their cycle of care. Most cost accounting  in health care rely on charges yet, in today’s health care marketplace, cost shifting have rendered these methods inaccurate. In 2010, Harvard Business School Professor Robert Kaplan introduced Time-Driven Activity-Based Costing (TDABC) to health care. In this unique approach, costing is approached from the bottom up looking at exactly what happens to a patient in the course of their treatment and develops accurate assessments of the true costs of all the processes of care a patient experiences in the course of their care. Since its introduction, TDABC has been tested in many delivery settings worldwide resulting in cost savings and efficiencies in many organizations and resulting increasing numbers of peer reviewed publications.

The cost of care needs to be measured by patient and condition, not for departments or support functions. The cost of care includes all the personnel, resources, supplies and supporting services involved across the full cycle of a patient’s care for a condition. Numerous pilots have revealed that measuring the true costs of care delivery for the patient’s condition in this way unlocks major opportunities to improve efficiency and guide reimbursement. For example, cost rates for individuals performing front line tasks can have as much as a ten-fold difference – a phenomenon unique to the health care industry. Having individuals work to the top of their license and training can substantially reduce the costs of care without adversely impacting outcomes.

Cost measurement begins by mapping all the processes involved in patient care for a condition, (or primary care patient segment) including all the personnel, equipment, space, and the time required for each process. Overhead functions such as billing, information technology, and human resource management should be attributed to the condition based on resource use resulting from the needs of patient facing resources. Time-driven activity-based costing (TDABC), using time and capacity cost rates to allocate resource costs, has become the gold standard in measuring the true costs of health care delivery and well described in a growing literature.

Currently, process mapping in health care is sporadic, covering mostly procedures or discrete visits. Costs are attached to care using arbitrary allocations rather than actual cost data. Most current IT costing systems do not identify which provider(s) is providing each service, the time taken to perform the service, and the other key inputs involved in the care. The electronic health record should identify who is performing the service, not simply charting the fact that the service was performed. Emerging technology will allow routine and efficient collection of such data.

Long Leg vs. Petrie Cast: Boston Children's Hospital Example

This map shows that the cast technician's labor cost of a long leg is roughly half that of a Petrie long leg cast (46 minutes versus 77 minutes) ultimately resulting in a cost difference in the two procedures yet the reimbursement is the same.  

Accurate cost measurement, when tied with outcomes that matter to patients form the basis of the value relationship in health care.