medical doctor working with operating room

Outcome-Based Model in Hospital Settings

March 21st, 2017 - 0 Comments

The healthcare system is driven by a volume-based approach, number of patient check-ups, diagnosis tests and surgical procedures. This approach has resulted in a decline in the quality of care for patients and high financial burdens for governments and individuals. Governments worldwide are concerned about the increasing costs and hence are now looking to cut down the healthcare costs besides providing better healthcare.

Outcome-based healthcare is a breakthrough in providing better healthcare and patient outcomes, and lowering costs. Looking at the unmet needs of patients, stakeholders should structure and redesign the way they plan and operate a process to create an environment that focuses on better patient experiences and outcomes. Outcome-based healthcare has no standard definition; usually, the cost of treatment against value generated for the patient in terms of quality of life is the defining criteria.

The preceding discussion outlines that outcome can be generated for the patient across the value chain. This blog focuses on the hospital settings. Hospitals should shift their focus to an outcome-driven business model; they must incorporate ways to quantify the patient experiences and outcomes. The hospitals should include or consider the following:

– Hospitals should design a structure to accommodate the outcome-driven model

– A structured patient journey emphasizing the provider’s involvement at various stages of treatment will reduce the time spent by a patient in the hospital

– The healthcare system should associate with technology-driven companies for better patient data tracking and to generate insights from the big data accumulated by the hospitals

– The use of Electronic Medical Records (EMR) should increase to improve patient tracking. The EMRs should include parameters to track the quality of life of patients

– Hospitals should design Key Performance Indicators (KPIs) to measure the outcomes of treatments

The policy makers and payers should also change the way they look at accrediting the hospitals and reimbursing the treatments. They should:

Michael Porter and Tom Lee outlined six components for an outcome-based model: integrated practice units, cost and outcome measurement, bundled payments, integrated care delivery across facilities, expanded services across geography, and an information technology platform to enable those processes. Cleveland clinic is one among the two centers worldwide that has implemented all six components1,2. The clinic used EMRs and generated insights to prevent unnecessary duplicate tests. This resulted in a 13% drop in blood-gas determinations and generated $10,000 in monthly savings for laboratory tests and $117,000 for genetic testing1.

The key drivers for an outcome-based approach:

– Process standardization: Well-connected departments, structured patient movement and proper flow of patient information within hospitals will reduce the errors

– Improving efficiencies: The hospitals must focus on improving the efficiencies in terms of handling data and treating the patients. Use of existing patient data will help identify their areas of improvement

– Establish transparency: Hospitals should publish the data on the outcomes of a treatment to maintain transparency

– Technological assistance: An alliance with technology companies to handle the huge amount of data and drive the insights to improve the patient outcomes

To adapt the new business model, the hospitals should stop looking into the number of patient visits, tests and procedures and start focusing on patient recovery, reducing the readmission, improving the quality of care etc. The healthcare providers must improve the efficiencies to reduce the variation in the treatment; this can be achieved by providing the correct diagnosis and treatment algorithms. Although designing the structure and measuring the outcomes generated will be challenging but it will always be beneficial. The future success of healthcare lies in outcome-based business models.


  1. Cosgrove, Toby. “Value-Based Health Care Is Inevitable and That’S Good”. Value-Based Health Care Is Inevitable and That’s Good. N.p., 2013. Web. 20 Mar. 2017.
  2. Porter, Michael E and Lee, Thomas H. “The Strategy That Will Fix Health Care”. The Strategy That Will Fix Health Care. N.p., 2013. Web. 20 Mar. 2017.


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