pay-for-performance and healthcare costs

editorial in the new york times (similar to my prior emails on the subject, but i thought raised the pay-for-performance in a broader context). raises a few issues regarding new york city proposal to pay doctors in public hospitals based on the quality of their work:

1. pay-for-performance (P4P) does not work (i sent out a BMJ article on this a few months ago), at least at the low reward levels offered (there are certainly many things we could do better, which would improve care and decrease costs, such as making sure that hospitalized patients have appropriate followup, med reconciliation, multidisciplinary approaches including nutrition counseling, physical therapy, etc.  Unfortunately, many of the currently incentivized items are not necessarily as useful but are easy to measure, such as whether an A1C has been checked according to a prescribed schedule which may not make much sense for many individual patients). in addition, those providers who work in wealthier institutions, see fewer patients/hour, have more support overall are more able to satisfy the P4P and the administrators are more able to game the system to get more rewards (some of this is my rantings, not in the editorial).

2. P4P does not address the biggest problem for cost: we spend twice as much per capita as other developed countries (now 18% of economic output), which is not significantly attributable to ordering more tests or prescribing more medications (we are mostly in line with other countries), but we pay much more for the tests than other countries. why??? because the other countries have a single payor system and can negotiate lower costs. one really clear example here (my addition) is that the VA system gets medications at a fraction of the private sector costs -- for example, 1000 metformin 500mg tablets cost the system around $5 -- that is about 1/2 cent per pill!!! yet, the pro-private sector Bush administration, in creating the drug prescription medicare policy ("Medicare D"), only included the private sector pharmacies and consciously dismissed the VA system pricing (and, thereby, hurting both the seniors and the economy overall)

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