PRELIMINARY: NOT FOR ATTRIBUTION OR CIRCULATION OUTCOMES ASSESSMENT AND HEALTH CARE REFORM

A fundamental restructuring of U.S. health care is inevitable, even if we don’t know what form the new system will take. But any program providing universal coverage will still need to solve the twin problems of poor quality and rampant growth in expenditures. Some observers have argued in favor of a greater reliance on technology assessment and cost effectiveness, making sure that every dollar spent yields maximal health benefit. We argue that outcomes assessment, or measuring directly the efficiency of a health care system (whether hospital, physician group, or larger network) is instead the ideal approach to solving these twin problems of lagging quality and cost growth. We first contrast technology assessment and outcomes assessment, and then present an example of outcomes assessment using hospital-level risk-adjusted mortality and Medicare expenditures during 1992-2004. In this exercise, focusing on just a few large hospitals, we demonstrate that the standard measures of process or technology assessment, such as use of effective drugs or surgical interventions, do not appear to explain much in the way of growth in actual mortality or expenditures. We argue that new methods to measure outcomes and costs accurately, coupled with the development of “accountable care organizations, ” hold the greatest promise for improving the efficiency and long-term viability under any health care reform