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Testing an Outcomes-Based Model

Revenue is linked to outcome - operational outcomes to health outcomes measured in cost, quality, revenue, patient experience, and process improvements.

Why an Outcomes-Based Business Model is valuable to your business:

Benefits
  • Deep alignment with customer's business
  • Payment tied to actual patient outcomes may provide competitive advantage if peers cannot tie activity to outcome
Challenges
  • May require complete reconfiguration of product and service to drive outcomes
  • May require a regulatory process or claim
  • May have no impact on actual outcomes
KPIs
  • Operational KPIs: affect core customer metrics (utilization, readmission, other)
  • Determine service level agreement (SLA)
  • If health outcome - KPIs around core service offering that leads to better health outcomes

Why an Outcomes-Based Business Model is valuable to your customers:

Benefits
  • Deep alignment with customer's business
  • Seen as a strategic partner, with a value proposition closely tied to customer's mission
Challenges
  • Knowing which products, services, and workflows drive which outcomes
  • Understanding system dynamics of organization
  • Customer may not be in control of key processes
KPIs
  • Actual operational or quality KPI performance vs. baseline
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Companies using DaaS business models:

Aledade
Arcadia
Evolent
Health Catalyst
Livongo
Omada Health
Noom
CareMore

KPIs of an Outcomes-Based Model depend on where in the continuum the company falls:

Most healthtech companies aim for outcomes-based as a future state business model, achieved after other lower hanging fruit models are established, claims are strengthened, and data transformed into knowledge.
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HealthTech companies often find other startup business models before earning their way into outcomes-based

Health Catalyst only recently offered a pay-for-outcome business model to a close partner, after a long term commitment and agreement to provide deeper service models to Alina Healthcare

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Key interview questions to validate an Outcomes-Based model:

Before you consider the Outcomes-Based model:

  • Test for jobs to be done, level of pain on the pain scale. How much of a priority is (defined problem or pain)?
  • Do we fit within the workflow of our customer enough to change the operational or quality outcome?
  • Do we require a regulatory process to make claims?
  • Can we determine another path to market that does not require regulatory process for MVP?
  • Do customers value outcomes enough? What is the total cost of not solving the problem? Of solving it poorly vs. our solution?

    When testing the solution:

    • How do we get access to critical data that informs our outcome?
    • Can we design smart ways to report out outcomes?
    • Determine the minimal offering that would be compelling enough to have the customer pay for the offering.
    • Can you design an MVP that has high usage and engagement with a minimal feature set?
    • Is there a user proposition that can be easily tested and implemented?
    • Is there a primary business model that can be considered ahead of delivering outcomes-based?

            • Example test cards (Osterwalder's Value Proposition Design)

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