Value-Driven Outcomes: A Program to Reduce Hospital Costs


SALT LAKE CITY, UTAH (Ivanhoe Newswire) — Recently, a breast cancer surgeon at the University of Utah Hospital compared the cost of an intravenous drug she routinely ordered to a pill one of her colleagues’ orders. Using a software tool called value-driven outcomes; she discovered her choice was ten times as expensive, with the same result. She immediately changed her practice. Here’s how the three year old V.D.O program is saving the hospital millions of dollars and improving patient care.

John Schneider was one of the first patients to get his knee replaced under the University of Utah Hospital’s value-driven outcomes, or V.D.O program. To improve his recovery and reduce costs, they got him moving hours after surgery.

“Right after supper, one of the physical therapists came down the hall and said, ‘John, you’re going to get out of bed.’” John explained to Ivanhoe.

Physical therapists now work evenings, because the V.D.O showed that starting rehab on surgery day saves as much as $700 a patient and improves recovery. V.D.O software analyzed 135 million rows of costs for billing, drugs, doctor and staff time, and medical devices for joint replacement, lab tests, and sepsis management. Doctors could now identify and compare true costs of care and saved seven to eleven percent in those areas.

Chris Pelt, MD, Chief Value Officer of Orthopedic Surgery at the University of Utah Health Care said, “The cost curve in the United States health care always is on the rise. So to see a change of eleven percent going down in overall direct costs, which is pretty important, I think.”

“We are seeing that we are able to save literally millions of dollars year after year as we continue to sort of find more ways to leverage the data to lead to better care.” Dr. Bob Pendleton, Chief Medical Quality Officer at the University of Utah Health Care stated.

Dr. Pendleton says the cost cutting is improving patient care as well, by standardizing practices.

Dr. Pendleton continued, “Cost is an important part of the equation and one that’s necessary for our overall University of Utah Hospital’s economics. But this really is about better patient care.”

The hospital is now working on putting 30 more clinical conditions into the V.D.O program.

Doctor Pendleton says the hospital has hosted leaders of academic medical centers who are trying to figure out how to apply principles of the V.D.O program at their hospitals and administrators from Singapore’s largest health care system visited and are implementing their own version of a V.D.O system.

Contributors to this news report include: Wendy Chioji, Field Producer; Jason Ball, Photographer; Roque Correa, Editor.

REPORT #2381

BACKGROUND: When it comes to healthcare, patients in the United States spend around 50% more money than other patients in first-world countries. The U.S. spent an average of $9,000 per person in 2013, which translated to more than 17% of gross domestic product. One of the reasons health care is so high is due to administrative costs; it is the highest in the world. Drug prices are also very high compared to other countries, and branding becomes a problem too. The U.S. government doesn’t have the power to negotiate prices of some drugs like other government’s do; therefore, the prices are created by the manufacturer.

(Sources: &

THE STUDY: The University of Utah Health Care created a study program called VDO (Value-Driven Outcomes) in which the healthcare procedures are broken down into materials used and nursing time in order to bring prices down. Currently, the U.S. uses a system called fee-for-service in which payment models reward care volume over value. VDO utilizes alternative payment models where the physicians understand the cost (not charge) and outcomes for patients with defined clinical conditions. In order to put this study to the test, the researchers focused on three procedures that seemed to have a lot of inefficiencies: joint replacement, in-hospital laboratories, and sepsis management.


HEALTHCARE’S MOST WIRED: The University of Utah Health Care says “for harnessing big data to understand actual costs and improve patient care, University of Utah Health Care has won a 2013 Innovator Award in the Health Care’s Most Wired competition, sponsored by H&HN Magazine (Hospitals and Health Networks).”


NEW REGULATIONS: VDO allows physicians to change their game plan in order to keep prices down for their patients. Joint surgeries are normally correlated with high prices, but the VDO study showed that going with alternative procedures would keep the costs down with similar outcomes. Another example is the time patients stay in recovery. The faster the patient gets out of bed and leaves the hospital, the less costly it will be. With VDO, physical therapists have to be available at all times, so that the patient can start recovery right away; sometimes even before the procedure. In the two years of the study, prices of joint surgeries fell down 10%, where 30% of those savings came from shorter times in the hospital. Lastly, 40% of price reduction came from supplies. Administrators had the task to renegotiate contracts and made sure surgeons were using supplies that were in discount. Not only did prices go down with VDO, but patient care went up as well; from 54% to 80%. It was proven that patients were having fewer complications with the program.


* For More Information, Contact:

Robert Pendleton, MD, FACP

University of Utah Hospital


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