Let’s take a trip back in time to 1982. Hair was big and Olivia Newton-John was even bigger. Hospitals were paid based on the bills that they submitted. This form of payment focused on increasing the number of service rather than the quality of the care itself.
It was right around then that two researchers were tasked with “fixing the system” by looking at patterns in patient data. After examining the correlation between diagnosis, medications and costs they determined that the fewer co-morbidities, the smaller the cost to the healthcare system. This realization lead to a huge change for the U.S. healthcare system as it moved from fee-for-service to bundled payments.