Pay for Performance(P4P): Another Complicated Mistake.

Stanley Feld M.D.FACP,MACE

The intuitive meaning of Pay for Performance (P4P) is the better you perform the more you get paid. This is true in many industries. The concept is well advertised in the well publicized salaries of professional athletes. Recently we have heard of grotesques salaries of fired CEO that get hundreds of millions of dollars in termination salaries for doing a bad job. They are getting paid well for poor job performance.

The underlying assumption is that with P4P, physicians should be responsible and accountable for medical outcomes. The physicians will be reimbursed for medical outcomes. The reimbursements made to the physicians are under the control of the government or insurance industry. These entities are interpreting the criteria for the quality of medical outcomes.

We have seen what happened to Dr. Petak even though his treatment is correct and saves money for the health care system. Many physicians feel P4P is simply code for reducing physician reimbursement. In an environment of existing mistrust between all the stakeholders, the potential is great for generating more mistrust. The growth of the mistrust will result in more dysfunction in the healthcare system and increased cost.

The definition of quality medical care has not been made clear by the secondary facilitators while proposing the P4P rollout. Organized medicine has not been outraged by the proposal. No one has analyzed it with all the potential for unforeseen consequence. Can P4P prevent the onset of disease or decrease complication rate for chronic disease? Who are the responsible stakeholders for increasing quality? The stakeholders responsible for medical quality care are the physician and the patient. If the patients do not adhere to the medical regime prescribed, the quality of care will not improve. Many studies have shown that compliance rates are as low as 30% for certain treatments. Patients will not have improved medical outcomes if they do not follow a treatment plan. Why should the physician be penalized? Why doesn’t the government and the insurance industry declare that patients are equally responsible for both good and bad medical outcomes? The structures of bureaucratic systems would not permit it because not only would it be judged to be insensitive it would be socially incorrect and result in a public outrage.

Patients have to be educated and become professor of their disease, be responsible for their health behaviors such as filling their prescriptions, exercising , decreasing obesity, not smoking or drinking. All preventive measures must be promoted. Patient need to be responsible their behavior and adherence to therapy. The physicians should not experience all of the brunt of poor outcomes or the credit for good outcomes. The P4P movement is misguided.

They are misguided when they think this is the fix. P4P represents another false hope and complicated mistake that in my opinion will lead to great cost to the healthcare system without improvement in medical outcomes.

I have defined quality medical care in a measurable way. None of these criteria are individual indicators of quality medical care. The system of quality of care should be the quality measure of prevention of medical complications and not the measurement of the parts on the path toward quality medical care. The patients’ activity is at least half of the quality equation to reduce the complications of chronic disease.

However, the secondary stakeholders are making a mistake with P4P. They have developed artificial quality indicators that do not measure quality medical care accurately. They want to force physicians to follow their indicators rather than use their medical skill and medical judgment. The way to improve quality is not to be punitive to the physicians. They are only one half of the quality equation to reduce medical care cost. The way to do it is to set up a competitive environment.

Lasik surgery is a perfect example. It stated with all ophthalmologic doing Lasik for $3000 an eye. Insurance did not pay for Lasik surgery. Some ophthalmologists’ developed focus factories that did just Lasik surgery. They developed economies of scale and expertise that enabled them to reduce the price. Patients chose these focused factories on the bases of price, and outcomes rather than the local opthalmologists. The price in some cities is now $250 an eye. Remember patients are not stupid. However, they are the 50% of the quality care equation. They will spend their money wisely and drive quality, if they own their healthcare dollar. It is our job to teach patients how to make the correct decisions. It is not the insurance industry or the government to restrict access to care and judge what is best. I believe the market place can do it.

In diabetes the healthcare system sends 15% of the healthcare dollar on 5% of the population and rising. Ninety percent of those dollars is spent on the complications of diabetes. If patients with diabetes were given control of their healthcare dollar and were rewarded for avoiding complications of diabetes we would be on our way to a competitive environment for the treatment of diabetes. The patients would search for physicians that had economies of scale and expertise to help them improve their quality of medical care. They would drive the creation of focus factories in diabetes as well as any other chronic disease. The system would then be stimulating competition and improving quality medical care not punishing physicians and patients. A negative and faulty penalty system (P4P) will not solve any of our problems. I predict it will only make it worse for the patient and the physician and more profitable for the insurance industry and hospitals. The physician and patient community ought to be outraged. They are not because we are a sound byte society and do not pay attention to the details of issues.

The P4P fad is simply another reason why patients need to be in control of their healthcare dollar. They should be rewarded if they avoid complications and improve their health. Physicians should compete to develop focus factories in order to generate economies of scale and improved medical outcomes. All of this has to be done in a price transparent environment.