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Paying Doctors Differently


Something is happening out there. Can you feel it?

It is like a small tremor before an earthquake or a brief lightning flash before a thunderstorm. It’s the signal that alerts us something is coming without indicating what it might be—ominous, promising, or revolutionary.

Our ossified, dysfunctional nonsystem of incentivizing the behavior of healthcare professionals gradually is eroding, even as the haves—the over-rewarded—cling to the past or rush to create the next procedure or modality to run by the insurance industry guardians of the dollar. The days of the system of paying for care in an a la carte manner—by the unit of the visit or performance of the procedure without consequence or reward for appropriate indications or demonstration of expected outcomes—clearly are numbered.

What will replace the current imperfect approach is not clear or perfect, but there are discernible, inexorable trends.

Much has been made of paying for performance— and this may drive change at the hospital level. Yet, it is doubtful individual physicians will substantially change their work flow or processes, or purchase new systems for measurement, just to get an extra dollar or two for better glycemic control of their patients.

Performance Will Matter

Few sectors of our economy have been so devoid of standards—or, more to the point, of rewards for better service or outcomes—than healthcare.

Could you imagine paying the same for a 2008 Lexus as you would for a 1995 Toyota? Could you imagine a pricing system that couldn’t recognize or properly reward the difference between Motel 6 and the Ritz Carlton, excusing the inability to differentiate them by saying they both have beds, sheets, towels, and indoor plumbing? Today, the worst orthopedist in the country and the best are paid the same fee for a hip replacement—whether it’s indicated or not. Most patients or purchasers of healthcare have no way to know which is which.

Performance measurement and standards are here, and while imperfect and evolving, they will be with us throughout the rest of our professional careers. Whether you are in the “process” or “outcomes” camp, you and your institution will be measured. The carrot or the stick can take many forms.

Right now, it is much more than about just reporting. Disturbingly, only 30% of physicians have participated in the first round of the Physician Quality Reporting Initiative (PQRI). Look for Medicare to apply financial pressure on physicians who do not report.

On the hospital side, reporting has focused as much on embarrassment as anything. In April, every hospital received its mortality statistics for pneumonia from the Centers for Medicare and Medicaid Services (CMS). In July, these numbers will be made public. Look for a flurry of indignation and activity as hospitals try to regain the trust of their patients and assure them they indeed can manage something as basic to their core mission as pneumonia. SHM will be developing strategies to help hospitalists help their hospitals improve their performance.

Much has been made of paying for performance—and this may drive change at the hospital level. Yet, it is doubtful individual physicians will substantially change their work flow or processes, or purchase new systems for measurement, just to get an extra dollar or two for better glycemic control of their patients. What may carry more weight is if lack of performance means some physicians, or even hospitals, are restricted from performing certain procedures or caring for certain illnesses.

Bundling Episodes of Care

A move is afoot to change the unit of healthcare delivery. SHM has been in discussions with MedPAC, which advises CMS on changes to the reimbursement system, about aggregating a continuum of care as a “bundled” episode of care.

More than 15 years ago, the implementation of diagnosis-related groups (DRGs) moved hospital thinking from a la carte charging for each aspirin to managing the use of resources for the entire hospital stay, since their reimbursement was fixed. The DRG payment system as much as anything has encouraged hospitals to develop and support hospital medicine groups. Bundling would extend and expand a DRG-like concept to physicians.

Think of a future where physicians are not reimbursed for an admission work-up, three daily visits, and a discharge summary. Instead, they’d receive a global fee that might include the hospital care, transitions to the outpatient provider, and measurement of performance that might include patient satisfaction and a low readmission rate.

If we look at healthcare from the patient’s viewpoint, this is the kind of service for which they’re crying out. They want to move away from a system that even with the best providers leads to each expert doing his or her individual part well, but with voltage drops and white spaces as the patient moves through an uncoordinated non-system.

Hospitalists are in a unique position to be successful, especially as we look for strategies that align our performance with strong and engaged outpatient physicians and when we fully engage the entire healthcare team.

A Team Sport

Bundling and rewards driven by demonstrable performance create interlinking responsibilities for care among multiple physicians (primary care physicians, emergency physicians, surgeons, subspecialists, and hospitalists), as well as allied health professionals (registered nurses, nurse practitioners, physician assistants, pharmacists, therapists, social workers, and case managers).

While the makeup of the team is important, the environment in which it performs is most crucial for success. A system of healthcare delivery that focuses on and supports best practices and nudges—or forces—providers to make the right choice is of prime importance. In the end, a good system of care and one or two members of the team can save the entire enterprise, leading to the best outcome for the patient.

By the same token, a dysfunctional outlier on the team can sink everyone, including the patient. Think of the “new” healthcare as a crew team that needs a well-made boat (i.e., the system of care), a good coxswain (accountable physician), and a group of rowers, each of whom know and execute their roles. One rower can sink seven Olympians.

We are all in the boat together. We need to be clear where the finish line is and how best to get there. The future is in sight, and we need to continue to shape our role in helping the rest of the team get there. We must do this for ourselves, our profession, and—most of all—our patients today and tomorrow. TH

Dr. Wellikson is CEO of SHM.

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