As a person who has been engaged in public policy in a multitude of industries for well over three decades, I remain shocked at the lack of rigor involved in such matters in the health care field. The issue is this: There should be a number of preconditions before one seeks to use financial incentives or penalties to influence behavior. If these conditions are not met, the financial tools will either not work or will have unintended consequences.
What might those conditions be? Let's start with a few:
1) Have a clear sense that the metric to be measured is determinative of the result sought.
2) Ensure that the recipient of the financial payment or debit controls the work flow associated with the metric.
3) Be confident that the recipient is likely to be influenced in the correct direction by the financial incentive.
4) Ensure that the amount of the financial incentive is sufficiently meaningful to the recipient that it is likely to influence his or her behavior.
5) Consider how to avoid the unintended consequences of the financial incentive, e.g., impacts on other metrics that are of concern.
We've talked about this problem with regard to penalizing hospitals for higher than average readmissions. Now, Kaiser Health News summarizes a recent NEJM article, as follows: "CMS penalties don't change hospital acquired infection rates."
A Medicare payment policy designed to push hospitals to cut their infection rates has had no effect in reducing two types of preventable infections among patients in intensive care units, researchers say in a study out Wednesday in the New England Journal of Medicine.
“The financial penalty did not further reduce infection rates, which were already going down because of multitude of (infection control) campaigns and interventions that were already ongoing,” said the study’s lead author Grace Lee, associate professor, Harvard Pilgrim Health Care Institute and Harvard Medical School.
Other studies have found the payment policy resulted in increased attention by hospital leaders – sometimes at the expense of other infections not targeted by the policy.
As policy efforts expand, the researchers say “careful evaluation is needed to determine when these programs work … and when they have unintended consequences.”
Piling on, Steffie Woolhandler, Dan Ariely, and David Himmelstein offer insights from behavioral economics in a post on Health Affairs Blog, entitled "Will pay for performance backfire?" The introduction:
Paying for performance (P4P) has strong intuitive appeal. Common sense and rigorous studies tell us that paying more for, say, angioplasties or immunizations yields more of them. So paying doctors and hospitals for better care, not just more of it, seems like a no-brainer. Yet while Medicare and many private insurers are charging ahead with pay-for-performance (P4P), researchers have been unable to show that it benefits patients.
Findings from the new field of behavioral economics may explain these negative results. They challenge the traditional economic view that monetary reward is either the only motivator or is simply additive to intrinsic motivators such as purpose or altruism. Studies have shown that monetary rewards can undermine motivation and worsen performance on cognitively complex and intrinsically rewarding work, suggesting that P4P may backfire.
Further on, they note:
The quality improvement literature has pinpointed many causes of quality breeches in medical care: fatigue; poorly designed workflow and care systems; undue commercial influence; knowledge gaps; memory lapses; reliance on inappropriate heuristics; poor interpersonal skills and insufficient teamwork, to name just a few. But “not trying” is rarely cited. Yet P4P implicitly blames lack of motivation for poor quality care.
But even when motivation is the problem, money isn’t always the solution. Findings from the new field of behavioral economics indicate that performance bonuses often backfire, particularly for cognitively challenging work.
Are there financial incentives that could work in the complex environment of hospitals and physicians' offices? Maybe so, but they will have to be much better designed that what we have seen so far. We'll explore this in future posts.