Measuring Output in Healthcare: What is the Right Measure?

Key Narrative

The US spends more on healthcare than any other country—about 18% of GDP—yet achieves mediocre health outcomes by developed-world standards. This paradox has many explanations, but one under-examined question is foundational: what are we actually trying to measure?

Healthcare systems optimize for what they measure. If we measure procedures, we get procedures. If we measure visits, we get visits. If we measure outcomes—but which outcomes?—we might get health. This post explores the measurement problem and proposes a framework for thinking about healthcare output.

Outline

I. Introduction: The Spending-Outcome Disconnect

• US healthcare spending vs. peer countries
• Life expectancy, infant mortality, preventable deaths
• The puzzle: more spending, worse outcomes?
• Hypothesis: we’re measuring (and therefore optimizing) the wrong things

II. What Healthcare Systems Currently Measure

A. Inputs (What We Spend)

• Total expenditure (national health accounts)
• Per capita spending
• Spending by category (hospital, physician, drugs, admin)
• Capital investment

B. Throughputs (What We Do)

• Procedures performed
• Hospital admissions
• Office visits
• Prescriptions filled
• Tests ordered
• Surgeries completed

C. Process Measures (How We Do It)

• Wait times
• Guideline adherence
• Hospital-acquired infections
• Readmission rates
• Patient satisfaction scores

D. The Problem

• Inputs ≠ outputs
• Activity ≠ value
• Current measures reward volume, not outcomes
• Fee-for-service as the embodiment of mismeasurement

III. What Should We Measure? Candidate Outputs

A. Mortality-Based Measures

1. Life expectancy

   • Pros: Simple, important, comparable
   • Cons: Driven by non-healthcare factors (poverty, violence, behavior)
   • Adjustment: Healthcare-amenable mortality

2. Quality-adjusted life years (QALYs)

   • Pros: Incorporates quality, not just quantity
   • Cons: Measurement challenges, ethical objections
   • Use in HTA (health technology assessment)

3. Disability-adjusted life years (DALYs)

   • Global health standard
   • Disease burden measurement
   • Comparison to QALYs

B. Morbidity-Based Measures

1. Disease incidence and prevalence

   • Tracking conditions over time
   • Prevention as output

2. Functional status

   • Can people work? Care for themselves?
   • ADLs and IADLs

3. Chronic disease management

   • HbA1c levels in diabetics
   • Blood pressure control
   • Disease-specific benchmarks

C. Patient-Reported Outcomes

1. Health-related quality of life (HRQoL)

   • EQ-5D, SF-36, etc.
   • What patients actually experience

2. Patient-reported outcome measures (PROMs)

   • Condition-specific
   • Before and after treatment
   • The outcome that matters to the patient

D. System-Level Measures

1. Avoidable hospitalizations

   • Ambulatory care sensitive conditions
   • Primary care effectiveness

2. Healthcare-amenable mortality

   • Deaths that shouldn’t happen with good care
   • Nolte and McKee methodology

3. Efficiency measures

   • Outcomes per dollar spent
   • Administrative cost ratios

IV. The Measurement Challenges

A. Attribution

• How much of health is due to healthcare?
• Social determinants: income, education, environment
• Lifestyle factors: diet, exercise, smoking
• Genetics
• Estimates: healthcare = 10-20% of health outcomes

B. Time Horizons

• Prevention today, benefits in 30 years
• Acute care: immediate feedback
• How to value future outcomes?

C. Case Mix

• Sicker patients need more care
• Risk adjustment methods
• The danger of cherry-picking

D. Data Limitations

• Claims data vs. clinical data
• What gets recorded vs. what happens
• Interoperability problems
• Privacy constraints

V. Frameworks for Thinking About Healthcare Output

A. Porter’s Value Equation

• Value = Outcomes / Cost
• Outcomes that matter to patients
• Full cycle of care
• Condition-specific measurement

B. The Triple Aim (IHI)

1. Improve patient experience
2. Improve population health
3. Reduce per capita cost

• The tradeoffs between aims

C. The Quadruple Aim

• Adding: clinician well-being
• Burnout as system failure

D. Outcomes-Based Healthcare

• Bundled payments
• Accountable care organizations
• Pay for performance (mixed evidence)

VI. International Comparisons

A. How Other Countries Measure

• UK: QALYs in NICE decisions
• Netherlands: outcomes registries
• Sweden: quality registries by condition
• Singapore: bundled payments

B. Lessons

• No country has solved this
• But some do better on specific dimensions
• The US is an outlier on spending, not uniquely on measurement

VII. A Proposed Framework

A. Levels of Measurement

1. Individual: Patient-reported outcomes, functional status
2. Condition: Disease-specific outcomes, guideline adherence
3. System: Population health, efficiency, equity

B. Principles

• Measure outcomes, not just processes
• Adjust for risk and social determinants
• Track over time (longitudinal)
• Make data actionable and transparent

C. Practical Steps

• Mandate PROM collection in CMS programs
• Expand all-payer claims databases
• Invest in data infrastructure
• Align incentives with outcomes

VIII. Conclusion

• What we measure shapes what we do
• Better measurement won’t solve everything
• But it’s a necessary condition for improvement
• The goal: health, not healthcare

Suggested Sources

Academic

• Michael Porter & Thomas Lee on value-based healthcare
• Nolte & McKee on healthcare-amenable mortality
• Kaplan & Porter on time-driven activity-based costing
• WHO Global Burden of Disease studies

Policy

• Commonwealth Fund international comparisons
• OECD Health Statistics
• CMS Quality Measures
• NQF (National Quality Forum) frameworks

Books

• Elisabeth Rosenthal, An American Sickness
• Atul Gawande, Being Mortal (on what outcomes matter)
• David Cutler, The Quality Cure

Data Sources

• CMS Medicare data
• HCUP (Healthcare Cost and Utilization Project)
• MEPS (Medical Expenditure Panel Survey)
• NHANES (National Health and Nutrition Examination Survey)

Organizations

• Institute for Healthcare Improvement (Triple Aim)
• International Consortium for Health Outcomes Measurement (ICHOM)
• The Dartmouth Atlas (variation in care)