This is the next chapter in my Wednesday is Student Day series. Rocky, a medical student, asks below: "What is your take on pay for performance, and will it be integrated into BIDMC?"
My economics professors in college set forth a series of theories and formulas that described the functioning of the free market. We all knew that this formulation was unrealistic, in that most markets are imperfect. There is often "friction" between parties in a marketplace that result in imbalances between supply and demand, that result in uneven knowledge between and among buyers and sellers, or that otherwise gets in the way of an economically efficient equilibrium condition.
But it was not until I joined the health care world that I discovered the extent to which an economic system could be so convoluted that there is virtually no relationship between the value of services provided and the compensation for those services. In health care, there are not only intermediaries between the procurer of a service (i.e., the patient) and the supplier (i.e., the doctor or the hospital), but the actual pricing of specific services is often based on the wrong premises.
I think that most people would like to think that a doctor or hospital would be paid based on the quality of the service provided, but that is not so. Most recently, insurance companies have introduced surrogates for real measures of quality. They attempt to reward providers with "extra" payments for certain accomplishments -- administrative or clinical -- that are deemed to be of value to the insurance company in the plans it offers to its subscribers.
This is a crude system in several respects. For one, the measures chosen do not always add quantifiable value. For another, even when they do add value, the amount of the performance bonus is not related to the value. For another, the bonus does not necessarily pass through to the specific providers who deliver specific services to patients. For another, the bonus is often not really a "bonus" that provides extra revenue to the provider. Rather, it is often in the form of a withholding of a portion of the fair compensation to which the provider is entitled even if the chosen metrics are not accomplished.
It is my hope that, over time, insurance companies will actually base payments on accurate and measurable levels of service quality. It is also my hope that the current imbalance in payments between "cognitive" specialists like primary care doctors, neurologists, and nephrologists and "procedural" specialists like surgeons and interventional cardiologists will some day be set aright. In the meantime, places like BIDMC live with the rules that are decided by the insurance companies. There really is no other choice for us, for, in the parlance of my economics professors, we are price takers. (By the way, the same is true regarding our payments from Medicare and Medicaid.)