Health care pay-for-performance good in theory but probably won't work
Carrots for Doctors
By BILL KELLER, NYT
WITH its ambitious proposal to pay doctors in public hospitals based on the quality of their work — not the number of tests they order, pills they prescribe or procedures they perform — New York City has hopped aboard the biggest bandwagon in health care. Pay for performance, or P4P in the jargon, is embraced by right and left. It has long been the favorite egghead prescription for our absurdly overpriced, underperforming health care system. The logic seems unassailable: Reward quality, and you will get quality. Stop rewarding waste, and you will get less waste. QED! P4P!
If only it worked.
For if you spend a little time with the P4P skeptics — a data-bearing minority among physicians and health economists — you will come away full of doubts. In practice, pay for performance does little to improve outcomes or to control costs. But if you look hard enough at why this common-sense approach doesn’t deliver, you find some clues to what might.
The New York plan would give hospitals bonuses to distribute to their doctors based on such indicators as patient satisfaction, speeding the flow of cases through the system and administering specific therapies. It is an attempt to get ahead of the federal law we all know as Obamacare, which includes rewards for hospitals that peg pay to a list of quality metrics. I’ve said before that I consider Obamacare an important leap forward, mainly for extending the basic safety net to millions of Americans. And there are aspects of the law, notably the Medicare Independent Payment Advisory Board, that may help bring down costs, if Congress can resist the temptation to interfere. But the pay-for-performance provisions are a triumph of theory over experience.
The first problem with P4P is that it does not address the biggest problem. Americans spend more than twice as much per capita as other developed countries on health care — a crippling 18 percent of the country’s economic output, and growing. Before studying the statistics, I assumed the root of the problem was doctors who, paid piecemeal for the services they provide, load up patients with marginal tests and treatments. In fact, America’s health care system is not much different from other developed countries in the volume of service. Our doctors prescribe more or less the same number of pills and X-rays, perform similar numbers of blood tests and surgeries, as doctors in the best European countries. While there are undoubtedly savings to be had by cutting unnecessary services (shortening hospital stays, for example), the main problem is that our system charges far more for each service — each office visit, each hip replacement, each day in a hospital bed, each dose of antibiotic. “The facile explanation is that doctors do too much,” said Peter Bach, a doctor at Memorial Sloan-Kettering who studies quality of cancer care. “But if you compare us to other countries on volume, we’re not leading in any category. The flip side is, we pay double for a lot of stuff.” (Actually, we lead in tonsillectomies and knee replacements, but his point is generally right.)
(More here.)
WITH its ambitious proposal to pay doctors in public hospitals based on the quality of their work — not the number of tests they order, pills they prescribe or procedures they perform — New York City has hopped aboard the biggest bandwagon in health care. Pay for performance, or P4P in the jargon, is embraced by right and left. It has long been the favorite egghead prescription for our absurdly overpriced, underperforming health care system. The logic seems unassailable: Reward quality, and you will get quality. Stop rewarding waste, and you will get less waste. QED! P4P!
If only it worked.
For if you spend a little time with the P4P skeptics — a data-bearing minority among physicians and health economists — you will come away full of doubts. In practice, pay for performance does little to improve outcomes or to control costs. But if you look hard enough at why this common-sense approach doesn’t deliver, you find some clues to what might.
The New York plan would give hospitals bonuses to distribute to their doctors based on such indicators as patient satisfaction, speeding the flow of cases through the system and administering specific therapies. It is an attempt to get ahead of the federal law we all know as Obamacare, which includes rewards for hospitals that peg pay to a list of quality metrics. I’ve said before that I consider Obamacare an important leap forward, mainly for extending the basic safety net to millions of Americans. And there are aspects of the law, notably the Medicare Independent Payment Advisory Board, that may help bring down costs, if Congress can resist the temptation to interfere. But the pay-for-performance provisions are a triumph of theory over experience.
The first problem with P4P is that it does not address the biggest problem. Americans spend more than twice as much per capita as other developed countries on health care — a crippling 18 percent of the country’s economic output, and growing. Before studying the statistics, I assumed the root of the problem was doctors who, paid piecemeal for the services they provide, load up patients with marginal tests and treatments. In fact, America’s health care system is not much different from other developed countries in the volume of service. Our doctors prescribe more or less the same number of pills and X-rays, perform similar numbers of blood tests and surgeries, as doctors in the best European countries. While there are undoubtedly savings to be had by cutting unnecessary services (shortening hospital stays, for example), the main problem is that our system charges far more for each service — each office visit, each hip replacement, each day in a hospital bed, each dose of antibiotic. “The facile explanation is that doctors do too much,” said Peter Bach, a doctor at Memorial Sloan-Kettering who studies quality of cancer care. “But if you compare us to other countries on volume, we’re not leading in any category. The flip side is, we pay double for a lot of stuff.” (Actually, we lead in tonsillectomies and knee replacements, but his point is generally right.)
(More here.)
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