Medicolegal Issues

The Hammer and the Anvil


In the not-too-distant future, a multiphysician hospitalist group is a participant in a pay-for-performance (P4P) program. Dr. Buchmann, the group’s lead hospitalist, is confronted by his hospital’s administration and informed that his doctors are performing below regional benchmarks for standards of care for community-acquired pneumonia, and, in fact, the hospital as a whole is below the mean performance levels.

The hospital threatens to break its contract with Dr. Buchmann’s group despite his response that his group sees a far more complex population than these standards can account for—and besides, his group has implemented a number of important quality initiatives in other diseases that are not part of the P4P program.

Several of the group’s hospitalists state that they will stop seeing indigent patients and will no longer take referrals for high-risk patients. Another partner feels it is unethical to continue treating pneumonia patients at the hospital without informing them of these quality findings and at least offering the option of transfer to a facility with better scores. Dr. Buchmann finds all these propositions unsettling.

While these physicians’ responses may sound extreme, the behavior of physicians caught between the hammer of financial survival and the anvil of professional ethics is unpredictable. Medicare and other payers have been implementing P4P plans as the latest attempt to stimulate quality reform. There are dozens of P4P-based programs operating in the United States, and the financial implications are daunting. Further, P4P is taking hold despite a relative paucity of research regarding its effectiveness in improving outcomes.

The behavior of physicians caught between the hammer of financial survival and the anvil of professional ethics is unpredictable. There are dozens of P4P-based programs operating in the United States, and the financial implications are daunting.

The underlying rationale of P4P is the use of economic incentives to stimulate changes in provider behavior. Recent work from the RAND Corporation suggests that as much as one-half of healthcare is not based on “accepted” best practices.1 And with increasing attention on the role of errors in medical practice, any effort to improve care seems, on its surface, laudable.

In general, key elements of P4P programs include a set of performance measures, the collection of data, comparison of provider data with benchmarks, and rewards for physicians who meet or exceed those targets. The interface between economic and financial incentives requires physicians to ensure that their behavior is in line with ethical and professional standards. While journals of medicine, law, and business contain many articles devoted to the policy and market implications of P4P, there is surprisingly little discussion in the literature regarding the potential ethical challenges that physicians may face in these programs.

For hospitalists (and other physicians), P4P may present several troubling ethical issues. Because the current scope of P4P is limited to a few diseases, widespread implementation might lead to relative neglect of patients with other illnesses. Higher-risk patients might be avoided, and individual patient concerns might become subjugated to population performance measures. Hospitalists could face the additional conflict of being accountable to (and/or dependent upon) hospitals, which feel P4P pressures of their own. A final issue is the question of whether shared decision-making and patient-centered care mandate disclosure of non-public quality data to patients.

The American Medical Association (AMA) has a policy that specifically addresses P4P.2 Its “Pay-for-Performance Principles and Guidelines” call for physician participation in P4P to be voluntary and to allow physicians to access their ratings for potential appeal prior to wider release. The policy insists that quality of care be paramount over cost savings and that the physician-patient relationship be preserved. Of course, P4P programs may not share the AMA’s ethical concerns and are not bound to consider them.

The ethical problems raised by P4P are underappreciated and inadequately discussed in the literature, particularly for how rapidly and rampantly these programs are being piloted and implemented.

Of particular concern—for both inpatient and outpatient physicians—is the fate of high-risk and unassigned patients. According to SHM’s 2005-2006 “Bi-Annual Survey on the State of the Hospital Medicine Movement” (, 96% of hospitalists are involved in the care of unassigned patients, and, in general, one of the strengths of hospital-based physicians should be their relative familiarity with the acute problems of patients who are older and of those with concomitant morbidities. Yet these are precisely the patient groups that are not well served by typical P4P measurements.

The potential for P4P incentives to create disparities in patient care among different patient groups and diseases is one of the prime concerns in the Council on Ethical and Judicial Affairs’ recent opinion for the AMA on P4P programs.3 The care of older patients, for instance, because of their own choices and due to frequency of comorbidities, may well come up short in performance measures designed for individuals who have a single disease.

This is not just a policy problem because P4P is not only unlikely to adequately address the ethical concerns of equitable care to these groups, it could exacerbate the vulnerability of these populations by creating a disincentive to provide care.4 A recent publication describing reports of cardiac surgeons turning away high-risk patients after “CABG report cards” became publicly available suggests that when given the option at least some physicians may indeed change their behavior when quality information is being collected and reported.5 Ironically, a system that incentivizes doctors to avoid the highest-risk patients could worsen—rather than improve—the overall quality of care.

Hospitalists may not be as sensitive to these pressures as surgeons or outpatient physicians, especially given the hospitalist’s limited flexibility in “choosing” patients. Care of unassigned patients may be a contractual obligation for which a hospitalist is paid by the hospital (which may face its own pressures in this area). And lower-risk referrals from outpatient physicians may “compensate” for the occasional complex patient.

Hospitalists are generally “need-based” practitioners who legally and ethically may not have the option to refuse care without risking patient abandonment. Yet the fact that hospitalists take on such patients may make their performance scores inferior to even non-hospital-based doctors—a difficult position to be in if one’s group receives payments from the hospital with an expectation of superior performance. Hospitalists in particular must consider whether or not insurance companies and the Centers for Medicare and Medicaid Services (CMS) could really accommodate all possible confounders in a risk-adjustment model to offset the nature of their patients. While the ethical choice might be for hospitalists simply to refuse to participate in P4P, citing multiple conflicts of interest, there is no clear indication regarding how “optional” these programs will be as they become increasingly prevalent, presenting yet another ethical issue.

Further, Medicare’s current P4P system for hospitals is directed at just five conditions, only two of which (congestive heart failure and pneumonia) are likely to fall within a hospitalist’s realm. But the list of common diagnoses under the hospitalist’s umbrella is, of course, much larger, including thromboembolism, pyelonephritis, COPD, cirrhosis, and sepsis. The data that exists for compliance with recommended care for some of these conditions (e.g., COPD) suggests that there may be substantial variability.6

But if hospitals base their support for hospitalist programs on their performance within a few CMS diagnoses, the effect on care for and development of appropriate guidelines and resources toward many other conditions may suffer. Already, hospital discharge forms are pre-printed with checkboxes for an angiotensin-converting enzyme (ACE) inhibitor prescription for congestive heart failure and counseling for smoking cessation. The (unethical) implication is that some diagnoses are more valuable than others, and that physician energies may be inequitably distributed—whether consciously or not. It is difficult to see how P4P could encompass standards for every patient condition, or how hospitals and providers could avoid focusing resources on those conditions that are more closely scrutinized by their payers.

Another issue arises if patient autonomy dictates that a treatment plan has to deviate from established guidelines; in such a case, hospitalists and other physicians may be forced to provide a care plan that is entirely reasonable from a medical standpoint but counts against them when compared with a benchmark. Ethical principles dictate that patient care be given priority, but unless consideration is made within the scoring system, performance measures that do not accommodate the ethical mandates to respect patient wishes or physician judgment are substantial pitfalls in the pursuit of better quality.7,8

One last issue concerns the question of whether or not providers have an obligation to disclose quality data to patients in the context of shared decision-making. This is a murky subject that involves determining the boundaries between the best means of pursuing quality improvement and the ethics of patient advocacy. The AMA’s Code of Medical Ethics states, “Patients should receive guidance from their physicians as to the optimal course of action,” and the issue of competence and responsibility to the care of the individual patient is the focus of several of the Principles of Medical Ethics. However, there is practically nothing published regarding the ethics, implications, or results of such disclosure, presumably because the availability of large amounts of quality-based data is such a new phenomenon and the considerations of such disclosure are so uncomfortable for many physicians.

Of course, some information—“CABG report cards,” for instance—is publicly available, but the evidence that patients actually utilize this information to a significant extent or that quality has improved due to its use is mixed.5 The question of whether an obligation exists to disclose non-public information when a provider knows that there is a question about performance relative to a benchmark or comparative peer group is uncharted water, ethically speaking; the issue is further complicated by the fact that appraisal of quality is far from a perfect science. It may be that the benefits of P4P result primarily from transparency, rather than from financial incentives. If so, disclosure may be the major component of quality reform, giving further weight to this question.

The ethical problems raised by P4P are underappreciated and inadequately discussed in the literature, particularly for how rapidly and rampantly these programs are being piloted and implemented. Although the AMA has taken a fairly clear and reasonable stance on the appropriate considerations for P4P programs, it is not clear that payers are incorporating all these concerns. A substantial number of hospitalist groups receive payments from medical groups or hospitals, which in turn are already involved in P4P for some diagnoses.

All hospitalists should read and familiarize themselves with these guidelines and carefully assess the implications of forthcoming P4P proposals for their own practices and patients. On a larger scale, SHM and its membership should strongly consider taking the lead in defining appropriate processes and outcomes for hospital care that incorporate these ethical concerns and allow for meaningful conclusions regarding both quality of care and opportunities for improvement.

Dr. Harte works at the Cleveland Clinic, and Dr. Rajput works at the Robert Wood Johnson Medical School, Camden, N.J. The authors wish to thank Tom Baudendistel and Donald Krause for their review and suggestions.


  1. Asch SM, Kerr EA, Keesey J, et al. Who is at greatest risk for receiving poor-quality health care? N Engl J Med. 2006 Mar 16;354:1147-1156.
  2. American Medical Association. Pay-for-performance principles and guidelines. Accessible at: Last accessed September 13, 2006.
  3. American Medical Association. CEJA 3-1-05 Report, July 2006. Available at: Last accessed September 13, 2006.
  4. Morreim EH. Result-based compensation in health care: a good, but limited, idea. J Law Med Ethics. 2001 Summer;29(2):174-181.
  5. Werner RM, Asch DA. The unintended consequences of publicly reporting quality information. JAMA. 2005 Mar 9;293:1239-1244.
  6. Lindenauer PK, Pekow P, Gao S, et al. Quality of care for patients hospitalized for acute exacerbations of chronic obstructive pulmonary disease. Ann Intern Med. 2006;144(12):894-903.
  7. Walter LC, Davidowitz NP, Heineken PA, et al. Pitfalls of converting practice guidelines into quality measures: lessons learned from a VA performance measure. JAMA. 2004 May 26;291(20):2466-2470.
  8. Boyd CM, Darer J, Boult C, et al. Clinical practice guidelines and quality of care for older patients with multiple comorbid diseases: implications for pay for performance. JAMA. 2005 Aug 10;294(6):716-724.

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