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Pay-for-Performance Attacks Hospitals - Shake Down or Fair Play

This blog has tried to support the virtue of personal responsibility. If you smoke, don’t blame Joe Camel. If you surrender to Big Mac attacks, don’t go after Ronald McDonald. If you love donuts, and your girth is steadily expanding, is it really Krispy Kreme’s fault? And, if you suffer an adverse medical outcome, then…

Medicare aims to zoom in on hospitals, suffocating them with a variation of the absurd pay-for-performance charade that will soon torture practicing physicians. Of course, a little torture is okay, as our government contends, but pay-for-performance won’t increase medical quality, at least as it currently exists. It can be defended as a job creator as several new layers in the medical bureaucracy will be needed to collect and track medical data of questionable value.

Medical quality simply cannot be easily and reliably measured as one can do with a diamond, an athlete or a wine. Most professions resist being graded or claim that the grading scheme is a scheme. Teachers, for example, refute that testing kids is a fair means to measure their teaching performance. Conversely, any individual or profession who scores well on any quality review program will applaud the system’s worth and fairness. Shocking.

Under the government’s new program, hospitals could be financially responsible for the cost of medical care that a patient requires for up to 90 days after discharge. One can imagine why this provokes angst with hospital administrators. It’s easier to defend the government’s concept if a heart attack patient is discharged prematurely and is readmitted two days later with congestive heart failure. The case is harder to argue is a stroke patient falls at a rehab facility 2 months after discharge and needs to be hospitalized. There will be spirited arguments as to whether the post-discharge events were preventable by higher quality and better coordinated out-patient care. Paradoxically, it might influence hospitals to prolong discharges, which increases costs and the risks of various hospital adventures, including infections and C. difficile colitis.

Government lexicographers have concocted a new phrase, ‘Medicare spending per beneficiary’, which will be used to compare costs among hospitals caring for the same types of patients.

How much responsibility can fairly be assigned to hospitals for bad stuff that happens once patients are released? If a medical event occurs at the nursing home, for example, would this be the hospital’s fault or the nursing home’s? It will be fun to watch the two institutions, who both champion patient care, duke at out. Cash breeds competition.

One item is beyond dispute. It’s a lot easier to measure cost than medical quality. I fear that many of these quality initiatives are veiled attempts to save money, but are camouflaged as medical quality incentive programs.

The ironic flaw in all of this is the absence of any quality control over pay-for performance and its cousins who claim they can raise the medical quality bar. I wish there was a way that we could pay these guys depending upon their performance. The government would resist this as it would be a job killer when all of these newly hired bean-counting bureaucrats would lose their jobs.


  1. Pay for performance will measure what can be measured in an attempt to validate that their investments are worthwhile. You are correct that the metrics are likely worse than useless. However, we will be locked into this as long as we use third party funding to drive our operations.

    Simplify the economic transaction by removing the third party and it becomes workable. Patients pay us for things that provide value to them. If they do not see value at the price we are asking, they do not request our services.

    Obviously there is a realm where third parties are needed. Insurance works in the realm of unexpected and catastrophic which should be a smaller portion of the health care economy than it presently is. The more we involve third parties, the more we must deal with their mandates since we operate with their money.

  2. @MC, thanks for the comment. With regard to your suggestion about the 'price we are asking, our prices are set by others and are being steadily lowered. Every other business can respond to overhead costs and to market forces by adjusting prices. Not us.

  3. And those prices are a mystery to us patients. That, in my opinion, should change. Costs matter these days and I'd like to know if I can afford an MIR or if PT for my bum knee is the better course of action. Pay-for-performance may not be the be-all and end-all, but I'll be curious to see if it affects price and reduces over-treatment.

  4. Medicare's Hospital Value-Based Purchasing (VBP) Program measures how providers are performing, not how patients are performing. It collects data on clinical processes of care relevant only to providers. While VBP does measure patient satisfaction, the HCAHPS hospital survey only assesses provider performance, and asks nothing of the patients' health status post-discharge.

    Value is defined as outcomes divided by cost. Given that VBP fails to measure outcomes, then it paradoxically imparts no value to the patient.

    In 2014, CMS will add three mortality measures to the Hospital VBP Program. Whoopy!! Believe it or not, mortality is not the outcome that patients value most. It's quality of life and return to function after the episode of care-- aspects of care that are not uniformly measured.

  5. e-doc: Great points.

    BTW, That donut looks so darn good. Haven't had a donut for years but that one is a real trigger for me. Might have to break down today....

  6. @TB, go for it! Have a Krispy Kreme. Is it worth denying yourself just to live 7 minutes longer?


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