Changing Incentives for Providers and Patients

Submitted by on Friday, September 5, 2014 - 06:04

A little over a year ago, with the support of the Robert Wood Johnson Foundation, we published a report that established a new framework for defining and designing incentives, for both health plan members and providers – We chose the title Improving Incentives To Free Motivation to express the core concept that consumer-patients and providers have important intrinsic incentives – motivation – that is often suppressed or, worse, twisted, by external incentives – the monetary gains and penalties that are the principal focus of today's reforms. Earlier this week, Mark Zezza and some of his colleagues at Commonwealth Fund, launched a discussion about Incentives 2.0, Beyond Financial Rewards and Penalties. That discussion and the associated field experiments should start shedding some light on ways in which the environment that surrounds the health care professional acts as a positive or negative charge on the internal generator that is their motivation. But what we can't and mustn't forget is the motivation of the organization with which the clinician is employed. Suzanne Delbanco illustrates in her recent blog post the effects of penalties on hospitals and health systems in reducing avoidable complications. What's pretty clear is that over a decade of so-called quality reporting to CMS and others hadn't made much of dent in reducing avoidable readmissions and other complications, but two years of back-to-back penalties have certainly done the trick.

What this means to you – All businesses have a pretty clear motivation to stay in business and to make enough money and profit to stay afloat and even thrive. And given a chance, they will optimize their opportunities using the easy way out. After all, why work hard for the money when there's a shortcut. One such shortcut has been consolidation, whether under the guise of "ACO-ishness" or simply to harness greater market power. For those who still doubt the effect on health care prices of provider consolidation, consider that Attorneys General of 16 States have filed friend-of-the-court briefs in a federal appellate case involving the purchase of a medical group by a hospital in Idaho. These briefs cite the negative effects of consolidation and argue that clinical integration can be achieved by means other than corporate acquisitions. We've argued the same for years. But the main point is that irrespective of the motivation of the clinicians managing patients in these systems, the motivation of the organizations that employ them is usually very different and driven almost entirely by the payment system. And unless and until these organizations are severely penalized for providing expensive and moderate quality care, while those who offer good quality at a reasonable price are rewarded, we can't expect that clinician motivation to do good will assert itself over organizational greed. Our lessons from the field are pretty clear that significant gains in quality and affordability can be achieved, and also that good performance must be followed through with more patient volume. Our point a year ago, and still today, is that incentives must change for providers and patients, at all levels. It's hard work but can be done and we welcome the new energy and important focus from our colleagues at the Commonwealth Fund.