All Engines
Healthcare Economics Engine

Episode-of-Care Valuation

Bundle all services for a clinical episode into a single price—from pre-op through 90-day post-discharge—and negotiate episode-based contracts that align provider incentives

Fee-for-Service Chaos

Hip replacement costs you $47K. But that's just the surgery—surgeon bills separately, anesthesia bills separately, PT bills separately, readmission bills separately. Nobody owns the total outcome. You pay for 37 separate line items and hope quality emerges. It doesn't.

Price Variation
300-500%
same episode, different providers
Readmission Cost
$15K-$40K
unplanned complications
Fragmented Bills
20-50
per episode

✗ What Fails Without This Engine

  • •Provider optimizes revenue per line item, not patient outcomes
  • •Readmissions are profitable—no incentive to prevent complications
  • •Can't compare total cost because episode definitions vary by provider
  • •Post-acute care uncoordinated: SNF, home health, PT all bill separately

Episode-Based Payment Intelligence

Our Episode-of-Care Valuation Engine defines clinical episodes, aggregates all related costs, calculates fair bundled prices with quality adjustments, and generates contract language for episode-based agreements. Provider gets paid one price for the full episode—they own the outcome.

Episode Valuation Algorithm
// Define episode
episode = {
  trigger: "Total knee replacement (DRG 470)",
  window: [-7 days pre_op, +90 days post_discharge],
  included_services: [
    pre_op_assessment,
    surgery,
    anesthesia,
    hospital_stay,
    post_acute_care,
    PT_sessions,
    follow_up_visits,
    imaging,
    related_complications
  ]
}

// Aggregate historical costs
historical_episodes = GET_claims(
  procedure_code = "27447",
  lookback = 24_months
)

FOR each episode IN historical_episodes:
  total_cost = SUM(all_related_claims)
  quality_score = CALCULATE(
    readmission_30d,
    infection_rate,
    patient_satisfaction,
    functional_outcome
  )

// Calculate bundled price
episode_price = PERCENTILE(total_cost, 40th) × 
                quality_adjustment_factor

// Risk adjustment
IF patient_age > 75 OR comorbidity_score > 3:
  episode_price += risk_premium

// Generate contract terms
contract = {
  base_price: episode_price,
  quality_bonus: +$2K if readmission < 2%,
  quality_penalty: -$3K if readmission > 5%,
  stop_loss: cap at 2× base_price for outliers
}

Engineering Architecture

Core Components

  • Episode Grouper: Clinical logic to assign claims to episodes (CMS ETGs + custom rules)
  • Cost Aggregator: Sum all related services within episode window
  • Quality Scoring: Outcome measures, readmission rates, patient satisfaction
  • Risk Adjuster: Patient acuity, comorbidities, social determinants

Valuation Metrics

Episode Price
$32K-$65K
typical joint replacement
Savings vs FFS
15-25%
episode-based contracts
Quality Bonus
$1K-$5K
per episode
Readmission ↓
30-40%
vs. baseline

Real-World Applications

Total Joint Replacement Bundle

  • •Historical FFS average: $52K (range $38K-$78K)
  • •Engine calculates fair bundled price: $44K
  • •Quality bonus: $2K if 30-day readmission <2%
  • •Provider accepts bundle, invests in care coordination
  • •Readmissions drop from 4.2% to 1.8%, average cost now $42K

Maternity Episode Contract

  • •Prenatal through 6-week postpartum: one bundled price
  • •Uncomplicated vaginal: $9,500 all-in
  • •C-section: $12,500 all-in
  • •NICU carved out (catastrophic stop-loss)
  • •Saved 18% vs. unbundled FFS, improved prenatal visit compliance

Pay for Outcomes, Not Line Items

See which episodes cost you the most. Get bundled prices benchmarked to your claims history. Generate episode-based contract templates ready for negotiation.

Request Engine Demo→