Pay for Performance: Here to Stay-for the Time Being

According to the Institute of Medicine’s reports and other studies, there are too many mistakes made in the management of patients. However, physicians are not directly responsible for most of these mistakes. Certainly we physicians must participate in a leadership role to improve the system, but the system is not made up just of physicians—it also includes nurses, pharmacists, and all the other myriad health team members. If pay-for-performance is to really work, then it may be best to focus on the systems (whether it be all the individuals involved in the care of a hospitalized patient or a doctor and a nurse in an office setting). However, if this approach is to be used, the financial incentive must be shared with all the parties to incentivize all those involved in the health care team.

Financial Incentives

The financial incentives must be, to use the accountant’s term, material. In other words, pay-for-performance incentives must be large enough to stimulate the desired changes. Many businesses motivate their employees with year-end bonuses or other financial incentives to stimulate the activities the management feels is desirable. Frequently these “bonuses” are in the range of 10% to 20% or more, so that the employees will see a meaningful financial return for their efforts. A token, small-percentage pay-for-performance incentive is not consistent with using money to stimulate a change in behavior.

Another concern that has been expressed is that we will all be required to practice “cookbook medicine.” There are many different approaches to managing a patient’s disease or disorder, but as evidence-based medicine expands (see related article, page 1), it will become clear that some approaches work better than others, which should improve quality if all physicians follow best practices. One advantage of a pay-for-performance system is that it will stimulate physicians to be aware of and follow the evidence-based medicine approach. However, as we all know, not all diseases have “read the textbook,” and variations in management are sometimes required. Any pay-for-performance system should take these unusual, but real, situations into account.

In addition to being valid, whatever system is used to measure quality must be as unobtrusive as possible relative to the physician’s time. If physicians are required to take time away from seeing patients to fill out forms and document this variation or that, or hire additional employees to do these tasks, then pay-for-performance could have the opposite impact than is envisioned.