Let's grow up regarding this carrot and stick hogwash in healthcare, shall we?

In our last post on this topic, we counted the reasons why it’s a waste of time and money to implement broad, bureaucratically-led medical “quality improvement” programs targeting specific performance metrics.  Since the recently passed healthcare reform law (the “Patient Protection and Affordable Care Act” or “PPACA”) places so much emphasis on pay-for-performance programs, it is reasonable to ask what we ought do instead.  There is clearly room for improvement in the structure and delivery of U.S.  healthcare services.  But there are appropriate ways to address these problems, and ways that will just lead us farther down the road to Hellth.

The best single analysis that I’ve seen on this topic comes (surprisingly enough) from two college professors who aren’t even in the healthcare business.  Barry Schwartz and Ken Sharpe are in the departments of Psychology and Political Science respectively at Swarthmore College.  In August of 2009, they published an article on this topic in Slate, entitled “The Wrong Cure – Better incentives, for doctors or insurers, won’t lead to better health care.”

This short, well written article should b mandatory reading for everyone in Congress and the Obama Administration who is asked to vote, regulate, or otherwise weigh in on anything related to healthcare policy or practice.  In it, Schwartz and Sharpe point out that switching from fee-for-service P4P incentives to global or capitation P4P incentives (as Massachusetts and the PPACA are offering to do), is the quality equivalent of rearranging the deck chairs on the Titanic.

“Massachusetts’ attempt to create incentives that are “smarter” is probably doomed. It’s relatively easy to eliminate incentives that are dumb, but it’s amazingly difficult to come up with incentives that are smart enough to do the job. After all, the incentives that contributed to our financial fiasco were hailed, just a generation ago, as a brilliant feat of human engineering. Yes, in principle, share price can be a reflection of the general health of a company. But once you incentivize share price, smart people can find a way to move it up without really improving—or sometimes even jeopardizing—the overall health of the firm.

By the same principle, incentivizing doing less can induce doctors to practice good medicine rather than expensive medicine. But you can be sure that over time, good medicine will morph into cheap medicine. And our objective in reforming health care should be neither more medicine nor less medicine, but better medicine.

The truth is that incentives are just too blunt an instrument to do what is being asked of them. If we want doctors to practice good medicine, then we have to inspire them to practice good medicine—not because it “pays” but precisely because it’s good medicine. In short, we need people who want to do the right thing because it’s the right thing. And it is here that incentives can become not just ineffective, but malign.”

They go on to present some examples of incentivizing that seem downright counterintuitive, until you realize that healthcare services (and virtually every other type of service), are provided by thinking, breathing people rather than machines.  This is a point that our political and regulatory leaders routinely ignore (if, in fact, they ever figured it out in the first place).

“When day care centers fine parents who are late to pick up their kids, lateness increases. Why? Because the fine turns a moral obligation (come on time!) into a service for a fee (we’ll take care of the kids if you pay us more!). Another example: When Swiss citizens were offered an incentive for agreeing to have a toxic waste dump in their community, their willingness to accept it fell by half. Why? The offer of an incentive induces them to ask What’s in my interest? instead of What are my responsibilities as a citizen?less likely to agree than if offered nothing. Why? Because the offer of money has turned the assistance from a favor into a job. And when people offer a stranger a token payment for help unloading a couch from a moving van, strangers are

For doctors who want to practice good medicine because it’s the right thing to do, demoralizing incentives can be a disaster. Yes, tinkering with incentives may be the way to go for those doctors for whom the practice of medicine has already been demoralized. But they will never substitute for the desire to do the right thing. And if, as seems likely, they actually undermine that desire, our efforts to make things better with the help of incentives may actually make them a good deal worse.

It is tempting, in light of our argument, to ask how can we incentivize good medical practice, so that we get more of it. Our answer is simple but perhaps unsatisfying: Good medical practice should be, and can be, its own reward. Almost all doctors want to practice good medicine—at least before they get socialized by the grind of medical school, residency, student debt, malpractice premiums, and the like.”

Frankly, it is this remarkable insight (as least, remarkable for non-physicians), that brings these guys to the only logical, efficient and economically and socially rational conclusion:

“Yes, of course, they want to make a good living, but many—perhaps most—doctors would happily trade high compensation for a chance to practice medicine as it should be practiced. So the most important thing to do about incentives is this: Cease and desist. Stop thinking about incentives as the way out of the health care cost explosion.”

This is the same response that every doctor in America knows in his/her heart, but is never given a chance to express in our top-down, the-government-is-in-control approach to healthcare.  Yes, stop with the carrot-and-stick hogwash already. Just stop.

So how do we systematically improve the quality of American Medicine?  There are many tools in the toolbox, none of which appear to have gotten the slightest bit of attention from the control-freak mentality of the-powers-that-be.  Here are a few to start.  I’m sure that you readers will be able to add many more:

Dump RBRVS.  Change the structure of healthcare provider compensation to a market-based hourly compensation model, with each provider setting his/her own rates.  You can read more about this approach and its many benefits here.

Make more effective use of specialty expertise.  All doctors are not the same.  Specialists are often a more efficient means of managing specific conditions than generalists, even if they have a higher rate of compensation.  Cheap and cost-effective are not the same thing.

When I was practicing as a medical internist, I did a lousy job of taking care of my diabetic patients relative to your average endocrinologist.  Is this because internists or family practitioners are less capable than endocrinologists?  Of course not, but frankly they have a better handle on managing these patients because that’s what they do all day.  They know the literature, they’ve used all of the options, and they’ve had practice, practice, practice.  It’s criminal that insurers should require referrals and pre-authorizations to have diabetic patients see endocrinologists, or that they should penalize primary care docs for “referring too much.”  If President Obama were to develop diabetes you can bet his disease would be cared for by an endocrinologist.  If he developed asthma, he’d be seen by a pulmonologist.  Every single patient deserves the same options, and the free market will sort out the cost.

Stop playing games with pre-authorizations. America is suffering from an epidemic of pre-authorizations.  Pre-authorization means that your doctor must first ask the permission of your insurer (whether Medicare, Medicaid or a private insurer), before he is allowed to order a test, prescribe a medication or refer you to another doctor.

Because they give insurers the last word on whether a test will or will not be allowed, these rules essentially allow insurers to practice medicine without a license.  Proponents justify this by arguing that doctors over-utilize tests, procedures and brand-name medications, but this is disingenuous.  Doctors work in an environment that arbitrarily distorts incentives in every way imaginable.  If market forces are allowed to work properly (see Recommendation #1), there is far less reason for providers and patients to over-utilize resources than there is for insurers to under-utilize them.  Quality care hinges upon allowing doctors to use the correct resource, at the correct time, using their best medical judgment.

Deploy simple, inexpensive, clinician-friendly web-based information systems to allow doctors to share information regardless of whether it’s stored on paper or within a “conventional” electronic medical record.  Intense lobbying by the HIT industry aside, there is no reason we need to disrupt clinics and spend billions to have an interconnected system of medical records.  Simply adding “electronic file cabinets” to offices, clinics and hospitals using paper records would produce enormous medical benefits almost immediately, and at a very low cost.

There are many paths to quality.  Too bad we’re not on any of them.  It’s criminal, really.

Another day, another dollar in the “quality improvement” business…

In our last post, we saw how difficult it can be to generate useful alerts and notices in the context of a medical quality improvement program.  Like it or not, “garbage in, garbage out” is the rule rather than the exception for the vast majority of bureaucratically dictated “quality control” programs that we’re ever likely to launch.  There are three primary reasons for this.

First and foremost, there’s Goodhart’s Law:

“Originally, an economic theory stating that if a particular definition of the money supply were to be used as the basis for monetary policy, the stability of its statistical relationship with spending on the economy would break down and the policy would prove ineffective. The law is now used more widely to highlight the problems of focusing on the value of any specific variable as an indicator. In simple terms, when a measure becomes a target, it ceases to be a good measure. The applications to performance measurement in management accounting and other aspects of business are obvious.”

Here’s how it works.  In its natural state, the percentage of diabetes getting Hbg A₁c tests might tell us something useful about the need for more education about diabetes management, the reluctance of patients to get these tests, an inability to pay for them, the inappropriateness of getting these tests in certain patients, or a whole host of other possible explanations for less than 100% testing rates.  But when we start to use the presence or absence of the test as a basis for reward or punishment, the statistics stop telling us much of anything.  Doctors will get the test whether it’s appropriate or not.  Patients who fail to comply will be discharged from practices.  And even when testing rates climb to 100%, the existence of the test alone tells us nothing about the actual quality of diabetes management for these patients.  All it does is tell us that the threats of reward or punishment increased the reported rate of testing.  Period.

Dr. James Gaulte’s blog recently highlighted an example of patient selection bias that will become inevitable as “pay for performance” initiatives expand.

Second, much if not most of medicine cannot readily be standardized in a way that makes “quality” indicators meaningful.  In his excellent book (which you should buy if you haven’t already), “Dr. Rich” Fogoros has eloquently described why this is the case:

“…not all medical processes are suitable for standardization.

The standardization tools of managed care work only when you’re dealing with a process that can be broken down into a predictable series of discrete, reproducible tasks that will generate reproducible results.  In other words, industrial management tools work best when the process of care is similar to the process of making widgets.

Hip replacement surgery, for instance, tends to be reasonably widget-like.  We know, for instance, that on Day 1 the hip replacement operation itself will take place.  We also know that since hip replacement is usually an elective procedure, any other medical conditions the patient may have will have been stabilized prior to surgery (and prior to entrance to the critical pathway), and so should not present unexpected problems during the hospitalization.  Thus the critical pathway can focus solely on steps to minimize the risk of complications of surgery, and to maximize rapid recovery. For hip replacement and many other elective surgical procedures, the use of critical pathways has resulted in reduced lengths of hospital stays, less cost, and more rapid (or at least, no worsening in the time of) recovery.

In contrast, developing critical pathways for many non-surgical hospital admissions has proven extremely problematic.  For many medical illnesses, neither the diagnostic procedures nor the treatments that may be employed are possible to predict, or thus to standardize.  For instance, consider what happens when we try to develop a critical pathway for congestive heart failure (CHF). Patients with CHF may have one or more of a variety of underlying conditions that caused their heart failure in the first place (such as coronary artery disease, valvular heart disease, viral infections of the heart muscle, and many others); they vary widely in their severity of illness (from mildly ill to moribund); and they often have related complicating disorders of one or more additional organ systems, such as kidney failure or peripheral vascular disease.  These factors, along with a multitude of others, ultimately determine what diagnostic and therapeutic maneuvers will be necessary.  Knowing only that a patient has been admitted to the hospital with CHF tells you nothing about whether that patient will require cardiac catheterization, angioplasty, bypass surgery, valve replacement, a pacemaker, an implantable defibrillator, a mechanical ventilator, a prolonged and complicated stay in the intensive care unit, or just a couple of diuretic tablets and overnight observation.  No two patients with CHF are alike; and there is no such thing as a “standardized” patient.

For medical conditions like this, in which every patient tends to be unique, managed care techniques tend not to be very useful.  Unfortunately, the majority of non-surgical hospital admissions fall into this category…

…In summary, “pure” managed care has given us some very useful ideas about how to make healthcare delivery more efficient without diminishing medical outcomes.  The principles of managed care are being widely and profitably used in most large hospitals in America today, and without a doubt have the potential of even broader applicability. However, contrary to the dogma, these principles are not applicable in many cases, nor do they always yield favorable results.”

What all of this means in real-world terms is that most of the medical “quality” problems that happen in the real world can’t be meaningfully tracked, categorized or addressed by brainless, bureaucratically mandated pay-for-performance programs or penalties.  Teasing out the crummy decisions from the rational ones would take serious case review, thought and evaluation by other physicians who actually know something about the anatomy, physiology, chemistry, psychology and economic particulars of the individuals involved.  Anything else is hogwash.

Unfortunately, that’s not how bureaucrats roll.  It’s a heck of a lot easier for them to simply ask that doctors waste hours turning in sets of forms and checklists.  All of which costs you the tax- and rate-payer a fortune, and does absolutely nothing to improve the quality of care.

The third systemic problem with “quality” programs is the one we’ve already identified: garbage data in, garbage reports out.  The Obama administration and the healthcare information technology lobby have used this problem as a major reason to push for the immediate purchase and use of electronic medical records by physicians, as well as spending billions of taxpayer dollars to subsidize these purchases.  Consider the language used in the 2009 stimulus bill that allocated about $20 billion to HIT purchases:

‘‘(b) PURPOSE.—The National Coordinator shall perform the duties under subsection (c) in a manner consistent with the development of a nationwide health information technology infrastructure that allows for the electronic use and exchange of information and that—

‘‘(1) ensures that each patient’s health information is secure and protected, in accordance with applicable law;

‘‘(2) improves health care quality, reduces medical errors, reduces health disparities, and advances the delivery of patient-centered medical care;

‘‘(3) reduces health care costs resulting from inefficiency, medical errors, inappropriate care, duplicative care, and incomplete information;

‘‘(4) provides appropriate information to help guide medical decisions at the time and place of care;”

While there is certainly a great deal of work that could be done to improve healthcare information and communications, the systems being forced upon providers nationwide are highly unlikely to have the spectacular effects advertised.  As reported here, there are very real questions about the safety of these systems themselves.  Interoperability among the complex, expensive proprietary systems on the market today is minimal.  Most importantly, however, as long as incentives are designed to look for one specific result or another, providers and information systems will dutifully produce that result as ordered.

All of these problems might not matter so much if such “quality” programs were costless or without social and medical consequences, but they are clearly not.  Ironically, it is practically impossible to determine what the true cost of these programs really is.  No good estimates of the total spending for government and/or private “quality” programs seems to exist.  Cost-benefit analyses do not seem to be a common component of these programs.  What is certain is that physician-insurer interactions already cost medical practices between $23 billion to $31 billion per year, and consume an average of over one-half work day per provider per week.

So how do we improve the quality of American healthcare?  This will be the topic of Part 3 in this series.