How Pay-For-Performance Can Backfire

From Health Affairs by Aaron Carroll:

One of the ways you can have really good stats is to treat healthier people in general…. Wealthy people tend to be healthier than poorer people, in general, so focusing your practice in wealthier neighborhoods, and limiting your Medicaid exposure, may tend to improve your outcomes. Minority populations tend to be unhealthier than non-minority populations as well. Therefore, hospitals that tend to have lower numbers of black or Hispanic patients might look better, too.

It gets worse. Because the hospitals that cover more poor people and more minorities tend to cover more unhealthy people, they may spend more money as well. So it’s possible for them to get the worst of both worlds. Their quality looks worse and their costs look higher.

…. There will be a strong impulse to create straightforward metrics like this study used to grade which hospitals are doing “well” and which are “wasting money”. When they do that, and decide to reward those that come out on top, hospitals that need the resources the most may be deprived of them first.

That’s backwards, and avoidable. Disparities will worsen, not improve. You can’t say you haven’t been warned.

See Kaiser story here.


Comments (4)

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  1. Devon Herrick says:

    Aaron is correct that meterics which are overly simplistic could backfire — harming the people who most need high-cost care.

  2. Buster says:

    Wow! Who would have thought the key to running a high-quality, low-cost hospital is to locate in a community with a high concentration of wealthy, Chinese women; and refuse to take Medicaid.

  3. Bruce says:

    Pay for Performance can backfire? No kidding?

  4. Ken says:

    Doesn’t it almost always backfire?