Pay for Performance: Peril for Patients

I’ve written before of the perverse incentives created by the price-fixed healthcare insurance model which reimburses every doctor the same fee for each service provided, promoting quantity rather than quality.  Recently, policy makers and insurance companies have noticed this problem too (over 30 years after they caused it).  They are slowly realizing that they are paying doctors to treat as many patients as they can, but not to treat them well.

There is now a major drive by policy makers for state and federal health systems and by private insurers do develop criteria by which to measure the quality of care that is delivered and to base payments to physicians and to hospitals on these measurements.  The various plans are called “pay for performance”.

Wednesday’s Wall Street Journal featured an op-ed by Dr. Jerome Groopman and Dr. Pamela Hartzband, faculty members of Harvard Medical School, who explain the terrible consequences of Massachusetts’s “pay for performance” programs.  Doctors are publicly scolded for failing to meet arcane criteria.  Rigid guidelines are inappropriately applied to complex patients.  Recommendations that are out-of-date are used to measure physician performance and to determine reimbursement.  The op-ed argues powerfully that these efforts are harmful to patients.  I urge you to read the op-ed (link below) for a frightening look at the growing medical bureaucracy.

The underlying assumption that prompts these misguided efforts to measure medical quality is that healthcare is too complex a field for the patient to figure out.  How can someone with no medical training possibly be a sophisticated healthcare consumer?  And if she can’t, shouldn’t we have policy makers define and demand quality for her?

But this assumption is false.  Savvy consumers shop for products and services all the time despite the fact that they don’t have specialized training in that field, and some of these products are far more complex than healthcare.  Customers with no technical knowledge can be very discriminating shoppers.  We buy cars, video game consoles and computers and hire architects and lawyers without a detailed understanding of the product or service we’re receiving.  How?  By using well-established markers of quality that don’t rely on expertise.  We read reviews; we look for businesses with long traditions in the same location and widespread positive reputations; we look for objective certifications of high quality.

Similarly, in healthcare, savvy patients insist on a physician who is board certified.  They check for complaints against a doctor’s license.  They ask for hospital and university affiliations, knowing that elite institutions will exercise some scrutiny over their staff.  Since patients have no way to test a doctor’s training directly, they expect ongoing education (and preferably teaching) as evidence of current knowledge.

In every other marketplace it’s the customer who pays for performance.  Excellence and affordability will be restored to healthcare when patients are allowed to keep and spend their own healthcare dollars and shop around.

Learn more:

Wall Street Journal opinion article: Why ‘Quality’ Care Is Dangerous

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