While I agree with the bottom line conclusion of Megan McArdle’s recent post, that while paying for quality in healthcare rather than quantity is an appealing idea it’s a lot harder to do in practice than it might sound:
The Barack Obama administration has announced plans to tie 90 percent of all Medicare fee-for-service payments to some sort of quality or value measure by 2018. Sounds exciting! Who wouldn’t like to ensure that their doctors are paid for delivering value, rather than just randomly sticking needles into us?
Unfortunately, as both the Official Blog Spouse and Aaron Carroll of the Incidental Economist have noted, there is less to this announcement than meets the eye. Saying you want to pay for quality instead of procedures is quite easy to say; indeed, many an administration has said so, because “paying for outcomes instead of treatment” is the holy grail of health-care economists everywhere. But actually doing this, rather than just saying it, turns out to be really hard.
I disagree in detail. For example, Megan writes:
Unfortunately, doctors don’t treat statistical universes; they treat individual patients.
That’s not completely true. Most physicians treat a hypothetical average patient, at least at the start. Doing anything else would violate the standard of care. They prescribe or do what works for most patients. If that isn’t effective they proceed in continuing approximation to treat the individual patient.
And that can vary from place to place in the country. When one of my siblings presented herself to her family physician in Des Moines with a health problem not only her family physician but a chain of specialists proceeded to treat her as though she were an average patient and in Des Moines the average patient is an overweight post-menopausal woman of primarily German descent with heart problems. Unfortunately for this course of treatment, my sister is not an overweight post-menopausal woman of primarily German descent with heart problems. She actually had to seek care outside Des Moines to receive the care she needed. Since she also shares a familial characteristic of perverse reactions to medications. You know the fine print on the prescriptions that begins “In very rare cases…”? We’re the “very rare cases”. That means she went through quite a bit of misery along the way.
My point in all of this is that not only is paying for quality or paying for outcomes difficult and perhaps even impossible doing it will require the retraining of two generations of physicians.
Docs are smart men and women. They’ll figure out how to game the system faster than any conceivable system of paying for quality will possibly be able to adapt.
As Megan points out (although not in so many words), “paying for quality” will inevitably mean that the federal government will inevitably pay suburban doctors more than it does inner city doctors because the population treated by the latter have different and more serious health problems. Is that really the kind of healthcare system we want?
Good post. I think this relates to what I see as a more general problem – the attempt to quantify everything in order analyze the numbers, make comparisons and set standards. Setting standards and the quantifying process are inevitably imperfect.
Let’s remember where we are starting from. Up until now we have had a fee for service model. Doing more means you make more money. Quality has not been much of a factor. In some ways it will be hard, but there is a lot of low hanging fruit. We need to be better about measuring stuff. We need to integrate care much better than we have been doing. The fee for service system has been a hindrance in fixing a lot of this.
But, just so you know, we are actually doing a lot of this. (When I read McArdle and most writers on health care it is very clear they don’t know people working in the field or they know only those with very limited POVs.)
Steve