Impact Of healthcare Delivery System Innovations On Total Cost Of Care

Smith KW, Bir A, Freeeman NLB, Keothe BC, Cohen J, Day TJ
Source: Health Affairs
Publication Year: 2017
Population Focus: Medicaid beneficiaries
Intervention Type: Service redesign, Staff design and care management, Technology/innovation
Study Design: Other Study Design
Type of Literature: White

Using delivery system innovations to advance healthcare reform continues to be of widespread interest. However, it is difficult to generalize about the success of specific types of innovations, since they have been examined in only a few studies. To gain a broader perspective, we analyzed the results of forty-three ambulatory care programs funded by the first round of the Center for Medicare and Medicaid Innovation’s healthcare Innovations Awards. The innovations’ impacts on total cost of care were estimated by independent evaluators using multivariable difference-in-differences models. Through the first two years, most of the innovations did not show a significant effect on total cost of care. Using meta-regression, we assessed the effects on costs of five common components of these innovations. Innovations that used health information technology or community health workers achieved the greatest cost savings. Savings were also relatively large in programs that targeted clinically fragile patients—clinically complex populations at risk for disease progression. While the magnitude of these effects was often substantial, none achieved conventional levels of significance in our analyses. Meta-analyses of a larger number of delivery system innovations are needed to more clearly establish their potential for patient care cost savings.

Insights Results

Overview of article/programs

  • This study evaluates the 4 shortcomings of typical delivery system innovations, funded through CMS’ healthcare Innovation Award Innovations program, through meta-regression to estimate the impact of specific delivery system components on federal expenditures for medical care within a subset of awardees focused on ambulatory care. The 4 identified shortcomings of current analysis of typical delivery system innovations are: 1) Focus on “winners”, which may be unrepresentative overestimates of the true impact of the delivery system model they embody; 2) Small pool of delivery system models; 3) Failure to recognize that most models are not singular entitles but may instead incorporate several different intervention components, especially when it comes to features like health IT; and 4) Some of the studies may reflect characteristics of the organization, not the innovation itself
  • In 2012 the Center for Medicare and Medicaid Innovation awarded nearly $1 billion in cooperative agreements known as healthcare Innovation Awards to more than 100 organizations across the country to test innovative approaches to delivering healthcare. The awardees adopted a variety of different delivery system models and combinations of intervention components
    Methods of the article
  • Authors used meta regression to estimate the impact of specific delivery system components on federal expenditures for medical care within a subset of awardees focused on ambulatory care
  • The primary outcome assessed was the impact of each innovation on the total cost of care for Medicare, Medicaid, and Medicare Advantage. Also, 5 care components (used as explanatory variables) were identified and used in the analysis: 1) Health information technology; 2) Behavioral health; 3) Community health workers; 4) Medical home; and 5) Telemedicine


    • The study assessed 43 innovations. Of the 5 intervention components, health IT was the only one present in more than half of the innovations. Use of telemedicine was the least common. The second most common was the use of community health workers
    • 40% of the innovations targeted clinically fragile patients and only 5% targeted socially fragile patients. Innovations that targeted clinically fragile patients had significantly greater savings, while effects for socially fragile patients were imprecise and close to 0
    • On average, total cost of care effects were about $0 per beneficiary per quarter but effects ranged from savings of nearly $1000 to excess costs of almost $750
    • The use of health IT and community health workers prompted the most estimated savings, while innovations with telemedicine components did not fare well

    Key takeaways/implications

    • The direction of the savings estimate on health IT converges with previous evidence suggests that use of the technology has been able to decrease utilization through changes such as decreased medication errors
    • Findings for clinically fragile patients is consistent with other work suggesting that greater savings can be achieved in sicker populations
    • Meta-regression can be useful for deriving reliable, generalizable findings about the value of delivery system innovations
    • Moving forward, it will be difficult but necessary to gather additional information about the performance of specific intervention components to permit more nuanced analysis
    • Limitations to the study include the small number of subjects (i.e., ambulatory innovations that meet eligibility criteria), and likelihood of variations across front-line evaluators in rigor used in conducting their analyses