Pay for Performance Won't Perform

With ever-increasing health care expenditures by businesses and employees in America, there has been an urgent need to reign in the costs of providing health care in America. It finally has dawned on many people that Medicare will be insolvent by 2018, a mere 12 years from now. In a desperate attempt by the American Medical Association (AMA) and the Center for Medicare and Medicaid Services (CMS) to get control, an initiative to pay physicians a bonus if they improve “quality” was born called “pay for performance.” The lead editorial in the Chicago Tribune this morning entitled "Paying to get it right" expoused the virtues of this initiative. On the surface, it sounds logical, an imperative for health care today. After all, who doesn’t want quality health care and doctors who “perform?”

Historically, part of the problem has been that doctors (and hospitals, I might add) have figured out that in the current Medicare payment system, quantity translates to increased revenues, not necessarily quality. See more people and do more procedures and you get paid more. (Many doctors' personal lives have failed pursing this model, I might add). Unfortunately, on the way to prosperity, corners have been cut, follow-up has been less than perfect, and errors have occurred. Ancillary staff feel the pressure, too. Turnover of nurses is at an all-time high and competition between health centers so keen that incredible incentives are offered to keep existing staff. And when they lose these staff, hospital administrators, desperate to maintain adequate inpatient staffing, cut corners and hire aides or technicians as “nursing extenders.” Care suffers.

In this respect, I completely agree with the need to improve the quality of care delivered. No physician today can argue that things aren’t like they used to be. But is pay for performance the way to improve the system? Or is pay for performance merely another bureaucratic hoop through which doctors and administrators must jump to be paid that further detracts from the real issues? Will this initiative rob more of our precious face-time with patients in the name of “quality?”

Fortunately, doctors are uniquely gifted at filling out check-boxes or fill-in-the-blank forms. We learned this in high school, college, and medical school our first two years. From the SAT’s, ACT’s, MCAT exams, and even our board certification exams, we’ve learned to fill in the little circles with our No. 2 pencils. So what the heck is another check box on the way to getting paid? Bring on pay for performance! No doubt it will cure all that is ailing in health care! According to the Tribune, the AMA is developing “more than 100 standard measures of quality to judge performance. Some of these measures will be reported to the federal government” with private employers and large insurance companies enthusiastically “joining the push.” We’ll just have to fill in a few more check boxes during our visit to get paid. I have no worries. The electronic medical record will make sure we complete our forms. And I’ll be thrilled that we're REALLY improving quality of health care! (Sense any sarcasm here?)

Unfortunately, as I stare at the screen and swear at the keyboard to complete these electronic computer forms, I’ll not be looking at the patient. But what do most patients care about when they see their doctor? Most will tell you it is a doctor who is willing to spend the time with them to listen to their complaints and concerns, review their history and examine them carefully, and act accordingly. Not sit at a computer screen and complete check boxes as "performance markers."

And will these “quality markers” do anything about the ridiculous sums of money that are bilked from the health care system by corporate leaders of the large insurance industry? I mean, really, is Mr. McGuire of UnitedHealth worth $2.7 billion in options? This sum is five orders of magnitude larger than any physician salary with whom I work. And this wasn’t even his salary. From the Providence Journal:

William McGuire, of UnitedHealth Group, the nation's leading insurer, was the third-highest-paid CEO on the Forbes list. His pay of $124.8 million could cover the average health-insurance premiums of nearly 34,000 people.

But McGuire is not the only one. Take a look at the insurance industry's CEO salaries. Now what is wrong with this picture? You, dear reader, are paying their salaries with your insurance premiums. So with this compensation, why would the insurance industry promote this "pay for performance" initiative? Well it’s all about the money. If doctors forget to check one of those little performance check boxes, then they won’t get paid. And this saves lots of money for the fat cats in the insurance industry, their profits soar, and their CEO’s get richer. And the insurance industry is not the only one – consider this about the pharmaceutical giant, Merck:

CEOs can win big even when the company loses. Merck, for example, had to pull its Vioxx pain medication off the market, because it increases stroke and heart-attack risk, and Merck stock was down 28 percent last year -- but CEO Ray Gilmartin got a supposedly performance-based bonus. His total 2004 compensation was $37.8 million, and he received a new grant of 250,000 stock options.

Now I am not suggesting that all corporate endeavors be stifled by limiting executive compensation, especially when drug companies bring such incredible drugs to market. But compensation within reason relative to the cost it exacts on our health care system should be considered.

But let's not exclude another cause of the rising cost of health care: lack of liability reform. This certainly has required insurers to raise their premiums to cover extraordinary losses from malpractice claims. How can any cogent discussion about health care costs not include this important consideration? Yet the Tribune left this issue off the table in their editorials.

Finally, could we be part of the problem, too? As the Tribune article states:

Americans expect – demand – medical miracles, high-tech tests, wonder drugs that cure. Many times they get them.

Let us not forget that these treatments are incredible and have added many years of quality living to our patients. But will we continue to demand these high tech options and unlimited amounts of wonder drugs, even for our 90 + year old father and mother? Will anyone in positions of leadership or government ever consider limiting the age at which we provide these expensive forms of care? Probably not, since politically (and some will argue, ethically) this would be suicide.

But one thing is clear. Any system that must, by law, provide health care to everyone over 65 in America with a fixed budget and is subject to an ever-growing and aging population and to continued inflationary costs, well this system cannot and will not support itself indefinitely.

Serious changes are in the wind. I just hope that doctors don't bear the brunt of the changes as they have in the past. Certainly we do not act alone. All of the pieces of this Big Medical Conundrum have participated in the improvements and innovation in health care that we've experienced over the recent years. But fixing this problem should not be limited to imposing "pay for performance" on the physicians and health care institutions. Instead, all of us, the patients, hospitals, doctors, insurers, and lawyers will have to contribute to the solution to the health care crisis. Anything short of this is just poor performance.

--Wes