Getting Better Outcomes From Outcomes-Based Healthcare

Screen Shot 2016-05-31 at 9.43.38 AMOutcomes-based healthcare is a popular topic of conversation in healthcare today. But despite its popularity, there isn’t a standard outcomes-based healthcare definition. One possible explanation is outcomes-based healthcare’s scope; it encompasses a vast spectrum of strategies used to transition from fee-for-service (FFS) to value-based care.

Although the industry lacks a standard, industry-accepted outcomes-based healthcare definition, there is something healthcare leaders can agree on: health systems need to embrace outcomes-based healthcare in order to survive the transition to value-based care. But healthcare organizations are up against seemingly endless challenges as they attempt to make the switch to this new, value-based approach to care delivery. While many of these organizations are slowly but surely (and successfully) making the transition, just as many feel overwhelmed by the inevitable challenges associated with changing the way they do business.

This article takes a closer look at outcomes-based healthcare and what it really entails. It describes the importance of making the transition, three challenges health systems are up against, and key success factors when it comes to moving away from an FFS model. A Texas Children’s Hospital success story shows these success factors in action and proves that making the transition, although difficult, is not only achievable, but also an absolute necessity.

Why Outcomes-Based Healthcare Is The Ultimate Goal

If saving lives is healthcare’s ultimate goal, then it must embrace outcomes-based healthcare. Without question, outcomes-based healthcare’s primary beneficiaries are the patient populations it serves. The main benefit to health systems pursuing outcomes-based healthcare is having a patient-centered vision that motivates everything they do.

Health systems want to provide the best possible care to their communities. But the FFS model has interfered with that important goal. Rather than striving to save lives and provide the best care, health systems stuck in an FFS world spend most of their time managing inefficiencies and solving problems. While the transition to outcomes-based healthcare is the ideal path toward restoring health systems’ ability to deliver on their promises to communities, they need an approachable, attainable guide for successfully making the switch. An outcomes-based framework requires calculated, thoughtful restructuring to meet current and future needs—and provides an ongoing template for driving continuous improvement.

Outcomes-Based Healthcare Is Reactive and Proactive

Historically, U.S. healthcare has been more reactive than proactive; its primary focus has been helping sick patients restore their health. Most outcomes-based healthcare definitions center on a reactive approach to healthcare—curing diseases, for example. Operating in reactive mode, health systems continuously ask, “Did we cure that sepsis patient?” or “Did we properly treat that heart failure patient?”

In outcomes-based healthcare, health systems focus on reducing variation in how they treat a wide variety of diseases and conditions—a process that requires all clinicians to provide accurate diagnoses and treatment algorithms to improve patient outcomes. Health systems are constantly striving to overcome inefficiencies and provide high quality care to patients. Although improving the way health systems care for sick patients is vital, it is not the only goal of outcomes-based healthcare—solely focusing on improving health system inefficiencies is myopic.

Outcomes-based healthcare also targets a more proactive approach to healthcare: creating a healthcare system that strives to maintain healthy populations and prevent illness. Embracing the proactive aspect of outcomes-based healthcare leads health systems to consistently ask several questions:

  • How do we maintain the health of our patient populations?
  • How do we prevent illness and keep individuals out of the hospital?
  • How do we operate outside our system walls to optimize community healthcare?
  • How do we incorporate population health into our business model?

Embracing these reactive and proactive nuances is critical for health systems transitioning to outcomes-based healthcare.

Top Three Challenges in Making the Switch to Outcomes-Based Healthcare

If transitioning to outcomes-based healthcare was easy, every health system would have done it by now. Although many systems are well on their way, no health system has successfully completed the switch to outcomes-based care. Health systems struggling to make the transition face three similar challenges:

Challenge #1: Limited Analytics Capabilities

Many health systems are healthcare data rich and analytics poor. To succeed in outcomes-based healthcare, health systems need data and the analytics capabilities to make data actionable. At the very least, systems need the ability to measure performance against outcomes goals, and the effectiveness of their outcomes improvement strategies. The lack of analytics and the resulting inability to evaluate performance and processes are barriers to health systems trying to move away from FFS models.

Challenge #2: Limited Access to Information

Health systems need to get data into the hands of frontline staff. Health systems can’t change how they care for patients across the continuum of care unless they equip frontline staff with information; the data-driven insights needed to improve outcomes. From pharmacy to claims data, clinicians need access to the right information to effectively and proactively manage patient populations. But many health systems struggle to make data accessible and useful; a problem that’s compounded by the need to aggregate data from other entities across the continuum. Aggregating and distributing information requires the technology infrastructure and organizational support most health systems don’t have in place.

Challenge #3: Inappropriate Organizational Structure

Most health systems aren’t organized for change. Without an effective organizational structure in place, organizations struggle to combat the inertia inherent in systems that have been delivering care in the same FFS way for decades. Healthcare leaders won’t transition their systems to outcomes-based healthcare unless they provide their organizations with realistic strategies and step-by-step guides for making incremental changes in the right direction.

Many systems have Lean and Six Sigma quality improvement programs in place as part of their efforts to change the status quo. But these improvement programs rarely translate to sustained outcomes. They may help improve outcomes in the short-term, but once that rigorous attention is withdrawn from the project, improvements dissipate.

The Top Outcomes-Based Healthcare Success Factors: Multidisciplinary Teams and Analytics

Health systems successfully navigating the transition to outcomes-based healthcare have two common denominators: multidisciplinary teams and analytics. Although the transition requires more than just the right teams armed with the right information, these are critical first steps when making the switch.


As evidenced by the Texas Children’s success story described in the next section, aggregating data into an enterprise data warehouse (EDW) and putting that data into the hands of the multidisciplinary team responsible for spearheading improvements are essential ingredients for the outcomes-based healthcare transition. Using analytics, health systems can make data-driven decisions about which outcomes improvement goals to pursue; ideally, those with the biggest benefit to patients.

Multidisciplinary Teams

The other common success factor is multidisciplinary teams. Successful systems establish and empower multidisciplinary teams to be agents of change, responsible for continuously improving targeted care processes. A team-based approach to outcomes-based healthcare leverages the expertise and influence of key stakeholders throughout the organization. Outcomes-driven teams typically consist of key members:

  • Clinician lead (most commonly a physician or someone with domain expertise)
  • Nurse or administrative champion (someone who can make administrative changes)
  • Data analyst (someone who can use data to ask and answer questions)
  • Representatives from other key stakeholders in the targeted care process

These teams lead the implementation and measurement of improvement efforts across the system. The critical characteristic of an outcomes-driven team is that it’s permanent—permanently dedicated to continuous improvement. Once health systems achieve their desired improvements (for example, a reduction in 30-day heart failure readmissions), outcomes-driven teams work to sustain the improvements.

An Outcomes-Based Healthcare Success Story: Texas Children’s Hospital

Making the switch to outcomes-based healthcare comes with inevitable yet surmountable challenges. Texas Children’s, a not-for-profit health system consistently ranked among the top children’s hospitals in the nation, has had measurable, sustained success in its transition to outcomes-based healthcare. By aggregating data into an EDW, running targeted analytics on that data, and putting multidisciplinary teams in place to spearhead change, Texas Children’s has made significant quality and cost improvements. Texas Children’s has improved physician productivity and decreased length of stay (LOS) while generating $74 million in operational improvements.

Analytics in Action

Texas Children’s first significant success came as a result of analyzing data; it discovered significant cost variation in asthma care. Using the wealth of new data at its disposal, the team discovered that a high volume of chest X-rays was being administered to asthma patients within the hospital. Drilling down into the X-ray data, they discovered that physicians were ordering chest X-rays for 65 percent of their asthma patients—evidence-based practice calls for an X-ray in only 5 percent of cases. Health system leaders thought they had a standardized order set in place to prevent unnecessary X-rays; however, when team members investigated the issue, they discovered that several order sets were circulating in the EHR.

By consolidating multiple order sets into a single, evidence-based order set, the team achieved a dramatic 46 percent reduction in unnecessary chest X-rays. This reduction resulted in a decrease in LOS for these patients—a driver of quality improvement for patients and cost improvement for Texas Children’s.

Multidisciplinary Teams in Action

As a first step toward improving the asthma care process, Texas Children’s leaders established a multidisciplinary team consisting of physicians, nurses, and experts in patient safety, quality improvement, finance, and IT. Leaders tasked this team with assessing and managing acute asthma from the time of arrival in the ED to discharge. The team was responsible for improving asthma care across all hospital facilities.

Texas Children’s clinical improvement team’s work didn’t end with its asthma care outcomes improvement. As a result of owning outcomes improvement for asthma care, the team has long-term responsibility for sustaining excellence in other care processes. For example, the team also took on reducing the delay between the time a child walks into the ED and the time he or she receives the appropriate asthma medications.

Leading Health Systems Prioritize Outcomes-Based Healthcare and Upstream Health

Truly mature health systems will transition to outcomes-based healthcare and, eventually, upstream health, in which genomic and epigenetic factors (social, economic, and environmental) are incorporated into the patient care model. A successful transition to upstream health requires access to and analysis of new sources of data, and the implementation of meaningful predictive analytics to care for patients and prevent disease from occurring in the first place.

The challenges of converting from a FFS care delivery system to outcomes-based healthcare abound—but they’re manageable when health systems integrate the two common denominators of success: putting the right analytics infrastructure in place and empowering multidisciplinary teams to implement and sustain change. By starting small—focusing on one improvement area and identifying a capable and enthusiastic team, health systems can transition to outcomes-based healthcare with the same measurable success as Texas Children’s.

Bryan Oshiro is chief medical officer at HealthCatalyst.


1 reply »

  1. Outcomes seems impossible to define: survival of acute episode; death rate; incidence of disabilities from episode; use of resources; economic impact on patient and on system…on and on. I think it is better to be crass and simply use total cost to patient and insurer.

    Then you need to answer: outcomes of what? ICD10 disorders?; ICD10 diseases+ CPT procedures and all combinations and permutations thereof? Outcomes of patient’s chief complaint? Outcomes of disorders significant to society like infections, obesity, HIV, STDs, depression?

    If you have too many variables you won’t be able to achieve useful data. Better just use total (patient and insurer) costs/ICD-10+CPT.

    So if value = outcomes/costs…you have to forget about the numerator and just use low costs as value. Low costs make fraction greater.

    Thus we can stop talking about value and be plain speaking.