EXECUTIVE SUMMARY

Demonstrating the value of medical innovation requires more than showing improvement in a single clinical outcome. To fully understand impact, stakeholders must be able to measure how an innovation affects downstream events, resource utilization, and total cost of care.

For medical technology companies and health systems, this means working together not only to enable practice change, but also to align on the right approach to measuring impact. When done well, this alignment can support outcomes-based procurement models that share risk, protect value, and drive adoption.

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Measuring What Matters Across the Care Continuum

Medical innovations often create value beyond the point of care where they are used. A technology introduced during a procedure, hospital stay, or outpatient visit may reduce complications, readmissions, or follow-up care weeks or months later.

To capture this value, medical technology companies must partner with health systems to:

• Enable the practice and workflow changes required to realize downstream impact
• Select metrics that reflect both clinical outcomes and associated utilization or cost
• Ensure those metrics can be measured reliably in real-world settings

Without this alignment, improvements may go unmeasured, and value may go unrealized.

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Enabling Outcomes-Based Procurement Models

When impact is measured appropriately, medical technology companies can pursue outcomes-based procurement contracts that allow them to maintain the price of their innovations, while sharing accountability for whether downstream savings or improvements are realized.

In these models, health systems are not asked to take on all the risk upfront. Instead, value is demonstrated through real-world performance, and financial terms are tied to agreed-upon outcomes.

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Four Steps to Designing an Outcomes-Based Agreement

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1. Develop a clear value hypothesis

The first step is defining how the innovation is expected to create value.

• Build an economic model that captures the clinical and utilization outcomes the technology is expected to influence, informed by published evidence.
• Validate key assumptions with clinical, operational, and economic thought leaders.

This model establishes a shared understanding of where value may be created, and where it may not.

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‍2. Agree on the value gap to be addressed

Economic models often reflect ideal conditions. Outcomes-based agreements do not need to guarantee the full theoretical value of an innovation. Instead, they should focus on closing the gap between:

• The incremental cost of the technology, and
• The portion of downstream savings or improvements that can realistically be achieved

Using local site data and biostatistical support, partners can assess:

• Baseline rates of key outcomes before implementation
• Sample size requirements to detect meaningful change
• How real-world performance may differ from clinical trial results

For example, if a surgical innovation is intended to reduce costly complications, stakeholders must agree on how many events would need to be avoided to offset the increased device cost, and how likely that improvement is at a given site.

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3. Determine how key metrics will be captured

Because outcomes-based agreements are not clinical studies, data collection must not be burdensome.

• Metrics should rely on existing systems, such as electronic health records, clinical documentation, or billing data.
• Minimizing new data collection increases the likelihood that health systems will engage and sustain participation.

The easier it is to measure outcomes, the more scalable the agreement becomes.

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4. Embed assumptions and commitments into the contract

Outcomes-based agreements work best when expectations are explicit.

• Specify what both parties commit to, including workflow changes, training support, and adoption expectations.
• Define regular checkpoints to review performance and assess whether outcomes are improving as expected.
• If outcomes are not improving, partners should review whether practice changes have been implemented as intended and whether use of the technology aligns with conditions under which benefits were demonstrated.
• Contracts should also define how risk is shared if outcomes are not met—for example, through rebates tied to the difference between technology cost and realized savings.

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Outcomes-Based Agreements as Risk-Sharing Partnerships

At their core, outcomes-based contracts are risk-sharing agreements. When designed thoughtfully, they allow medical technology companies to protect the value of their innovations while giving health systems confidence that adoption will translate into measurable benefit.

Across this series, we’ve explored how defining value, enabling practice change, and measuring impact are deeply connected. Aligning on the right approach to measurement is what ultimately turns innovation into sustained value—for patients, providers, payers, and the health systems that serve them.

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‍Eva Baginska is Senior Director, Value and Access at Alkemi. She helps life sciences teams turn clinical results into clear value for each stakeholder, so treatments earn access and adoption across settings of care.