Paying Doctors for Performance Does Not Work

Aaron Caroll, in the New York Times:

doctor-xray-2“Pay for performance” is one of those slogans that seem to upset no one. To most people it’s a no-brainer that we should pay for quality and not quantity.

In Britain, a program was begun over a decade ago that would pay general practitioners up to 25 percent of their income in bonuses if they met certain benchmarks in the management of chronic diseases. The program made no difference at all in physician practice or patient outcomes, and this was with a much larger financial incentive than most programs in the United States offer.

Even refusing to pay for bad outcomes doesn’t appear to work as well as you might think. A 2012 study published in The New England Journal of Medicine looked at how the 2008 Medicare policy to refuse to pay for certain hospital-acquired conditions affected the rates of such infections. Those who devised the policy imagined that it would lead hospitals to improve their care of patients to prevent these infections. That didn’t happen. The policy had almost no measurable effect.

No doubt about it: Changing behavior is hard — especially when there is a significant amount of uncertainty about outcomes. But we’ve made it worse in health care. When the doctor is accountable to the National Health Service or an insurer chosen by his patient’s employer, it is demoralizing and difficult for the patient and doctor to give signals to each other about quality and value.

Comments (13)

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  1. Big Truck Joe says:

    But I thought Doctors love listening to nameless, faceless bureaucrats who develop clinical practice guidelines to tell them how to practice medicine. Hmmm? Go figure.

  2. Devon Herrick says:

    Pay for performance is something we can all agree on. The problem is: HHS expects doctors and hospitals to adopt practices that are not in their self-interest to do so. If something is not in providers’ self interest, it’s unlikely to get done. At issue is the fact that outcomes are hard to measure. What works for one patient, may not work for another. Indeed, the second patient may not improve regardless of what is done for them. Moreover, medical care goes by multiple names! What payers consider “waste” is called “revenue” to a doctor or hospital. So how do you make high quality efficient care in a hospital’s self-interest? You align the incentives of the payer and the provider. We do this everyday in other markets. If Walmart mislabels prices and we get to the cash register and a gallon of milk rings up at $25, we complain. If Safeway stops displaying prices at all and acts incredulous every time a customer asked about price, consumers would stop shopping there. If we had to wait in line just to buy goods at Macy’s and discuss whether we needed a white shirt or a red dress (and bill it through an employer payroll deduction account), we would probably balk.

    In health care HSAs are designed to get doctors to compete for business the way Walmart competes for consumers. Reference pricing is another way to make patients price sensitive at the margin.

  3. Jay says:

    “Paying Doctors for Performance Does Not Work”

    So then what are we paying them for?

  4. Matthew says:

    “The program made no difference at all in physician practice or patient outcomes, and this was with a much larger financial incentive than most programs in the United States offer.”

    I find it interesting that it made no difference. If this policy has no effect, what other policies could be made that incentivizes doctors to improve quality in patient care?

  5. Thomas says:

    How do we define the goals that we are setting for doctors? If the incentive is to provide better patient care, how do we define it?

    Whatever the definition is, it isn’t enough of an incentive for physicians change.

  6. James M. says:

    “Studies in other fields show that offering extrinsic rewards (like financial incentives) can undermine intrinsic motivations (like a desire to help people).”

    Perhaps there is more reliance on intrinsic motivations for docs, and there is no way to further maximize the intrinsic motivation.

    • John R. Graham says:

      In a way, I think the fact that doctors have a vocation is what allows the government and insurers to abuse them so much. They are highly intrinsically driven to practice medicine.

    • Buster says:

      Perhaps there is more reliance on intrinsic motivations for docs, and there is no way to further maximize the intrinsic motivation.

      Maybe the government could send someone to the doctors’ offices to hold hands and sing Kumbaya!

  7. Mary W. says:

    Good outcomes produce happy patients, which produce patient referrals to those doctors. Isn’t that the true measure of outcome. Take the government out of it…

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