Exploring the Nexus of Quality and Cost
By Denise Remus
Premier
August 31, 2006
Executive Summary
This document describes analyses examining quality of care, patient outcomes and cost. The quality measures were collected as part of the Centers for Medicare and Medicaid Services (CMS) / Premier Hospital Quality Incentive Demonstration (HQID) project, a groundbreaking national pay-for-performance (P4P) project involving more than 260 hospitals. The HQID was designed to provide a combination of financial rewards and public recognition to hospitals that demonstrate high quality performance in caring for five clinical populations in the acute care setting. The purpose is to facilitate improvement in the quality and efficiency of patient care.
Participants in the project achieved statistically significant improvements in quality of care, as measured by thirty-three process and outcome measures, in the five clinical areas of:
* Pneumonia (PN)
* Coronary Artery Bypass Graft (CABG)
* Acute Myocardial Infarction (AMI)
* Hip and Knee Replacement Procedures (Hip/Knee)
* Heart Failure (HF)
While this demonstration project has shown that pay-for-performance programs have the potential to increase clinical quality and save lives, Premier was interested in examining whether higher quality of care could result in lower costs and improved patient outcomes. Earlier analyses focused on the relationship of quality and cost at the hospital level and minimal correlation was found. This study focused on quality, outcomes and cost at the patient level. The study found that patients who receive high quality care have fewer complications and fewer readmissions; significantly lower hospital costs, significantly shorter length of stay; and, for coronary artery bypass graft (CABG) patients, significantly lower mortality rates.
http://www.premierinc.com/p4p/press/quality-cost-methods-paper3.pdf
And…
Pay-For-Performance: Too Much Of A Good Thing? A Conversation With Martin Roland Interview
by Robert Galvin
Health Affairs
September 5, 2006
Abstract
As the United States moves down the road of pay-for-performance (P4P), concerns about unintended consequences are foremost in the minds of policymakers. Initial results from the world’s most ambitious P4P program, the United Kingdom’s Quality and Outcomes Framework (QOF), indicate that while quality improvements exceeded expectations, so too did the amount of funds paid out, straining the National Health Service (NHS) budget. Martin Roland, one of the leading U.K. health services researchers and an adviser to the QOF, gives his views on what went right and what went wrong, and he offers his advice to the United States about using financial incentives to improve quality.
>From the interview:
Galvin: One of the ideas to achieve budget-neutrality is that doctors with poor performance get paid less. What do you think of that idea?
Roland: Well, that’s inevitable in zero sum, isn’t it? Some get more, some get less, and the budget is overall neutral.
Galvin: It could play out that doctors get less of an increase versus an actual decrease. But either way, how do you think that this might affect doctors’ sense of professionalism?
Roland: Well, again, it’s much easier to give somebody a smaller increase than it is to reduce his or her pay. I think that most people in most jobs would find it pretty demotivating to get less pay. You can only introduce a zero-sum pay-for-performance scheme fast if you are prepared to have a substantial number of doctors losing significant amounts of money.
And…
Roland: I don’t think that providing health care is quite the same as manufacturing computers.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w412
Comment:
By Don McCanne, MD
Pay for performance (P4P); what a simple concept. When the providers (physicians and hospitals) demonstrate higher performance on quality and costs, reward them with extra payment. To maintain zero-sum budget neutrality, fund those rewards with financial penalties against those with lower performance scores; that will motivate them to shape up.
But what have we learned from Premier? At the provider (hospital) level, there was only a minimal correlation between quality and cost. However, when assessed at the patient level, favorable correlations between quality, cost and outcomes were demonstrated. And isn’t health care really about the patient?
Is rewarding physicians for better performance measures a good idea? The British experience suggests that any financial rewards should be very modest, or spending will increase since you can’t bankrupt the portion of the system with lower scores. Physicians in difficult practice environments, facing chronic under-funding, poverty, poor patient compliance, and impaired access by patients, will have lower scores even though their actual performance may be superior. On the other hand, physicians in well-financed, uptown practices might well benefit from manipulations of their practice managers who develop expertise in making certain that the quality scores are optimal. P4P would shift funds from the former to the latter. Is that sound policy?
The field of medicine still stands apart. In the computer business, higher quality brings financial rewards. But in medicine, higher quality brings healthier patients. And penny ante rewards will never distract physicians from that sacrosanct obligation to try their very best to attain better health status for their patients.