Implementation of a Value-Driven Outcomes Program to Identify High Variability in Clinical Costs and Outcomes and Association With Reduced Cost and Improved Quality

IMPORTANCE: Transformation of US health care from volume to value requires meaningful quantification of costs and outcomes at the level of individual patients. OBJECTIVE: To measure the association of a value-driven outcomes tool that allocates costs of care and quality measures to individual patient encounters with cost reduction and health outcome optimization. DESIGN, SETTING, AND PARTICIPANTS: Uncontrolled, pre-post, longitudinal, observational study measuring 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 laboratory utilization, and management of sepsis. EXPOSURES: Physicians were given access to a tool with information about outcomes, costs (not charges), and variation and partnered with process improvement experts. MAIN OUTCOMES AND MEASURES: Total and component inpatient and outpatient direct costs across departments; cost variability for Medicare severity diagnosis related groups measured as coefficient of variation (CV) ; and care costs and composite quality indexes. RESULTS: From July 1, 2014, to June 30, 2015, there were 1. 7 million total patient visits, including 34 000 inpatient discharges. Professional costs accounted for 24. 3% of total costs for inpatient episodes (114. 4 million of 470. 4 million) and 41. 9% of total costs for outpatient visits (231. 7 million of 553. 1 million). For Medicare severity diagnosis related groups with the highest total direct costs, cost variability was highest for postoperative infection (CV = 1. 71) and sepsis (CV = 1. 37) and among the lowest for organ transplantation (CV ≤ 0. 43). For total joint replacement, a composite quality index was 54% at baseline (n = 233 encounters) and 80% 1 year into the implementation (n = 188 encounters) (absolute change, 26%; 95% CI, 18%-35%; P <. 001). Compared with the baseline year, mean direct costs were 7% lower in the implementation year (95% CI, 3%-11%; P <. 001) and 11% lower in the postimplementation year (95% CI, 7%-14%; P <. 001). The hospitalist laboratory testing mean cost per day was 138 (median IQR, 113 79-160; n = 2034 encounters) at baseline and 123 (median IQR, 99 66-147; n = 4276 encounters) in the evaluation period (mean difference, -15; 95% CI, -19 to -11; P <. 001), with no significant change in mean length of stay. For a pilot sepsis intervention, the mean time to anti-infective administration following fulfillment of systemic inflammatory response syndrome criteria in patients with infection was 7. 8 hours (median IQR, 3. 4 0. 8-7. 8 hours; n = 29 encounters) at baseline and 3. 6 hours (median IQR, 2. 2 1. 0-4. 5 hours; n = 76 encounters) in the evaluation period (mean difference, -4. 1 hours; 95% CI, -9. 9 to -1. 0 hours; P =. 02). CONCLUSIONS AND RELEVANCE: 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.