The P4P Fallacy Continues

You are not going to believe this but even the New York Times is against the Pay-for-Performance trend that is ruining our healthcare system. I wish the author, Bill Keller, knew more about what he was talking about, though.  He should have contacted me if he wanted to spice up his  article.   Alas, he did not so here are some the highlights he points out:

  • The logic seems unassailable: Reward quality, and you will get quality. Stop rewarding waste, and you will get less waste. QED! P4P!  If only it worked.
  • In practice, pay for performance does little to improve outcomes or to control costs.
  • But the pay-for-performance provisions are a triumph of theory over experience.
  • Another problem with P4P is that providers learn how to manipulate the results.

I didn’t highlight much more because much of what he states is total horeshit and shows how little he knows comprehends our medical system.  Highlights of this include the following (with my comments in parenthesis):

  • But if you look hard enough at why this common-sense approach doesn’t deliver, you find some clues to what might (Really?  Studies show differently but this sleuth has somehow found the answers. Not.).
  • The main problem is that our system charges far more for each service (He does not go into detail on where our money is going).
  • But the main reason everything costs less in other countries is that other countries tend to have one big payer — usually the government — with the clout to bargain down prices (Bureaucracy is where the money is going now.  This includes the insurers, the administrators and the government.  This is not solved with more government which has NEVER shown to bring down prices for anything).
  • As hospitals merge into mightier megachains, they may be able to bargain down the payments to doctors and drug companies and device-makers, and create economies of scale by standardizing treatments (Dude, those Megachains save the money for their shareholders and administrators!  You are so clueless).
  • PETER PRONOVOST, a physician and professor at Johns Hopkins, says that rather than bribe doctors to adopt better practices, we should play to doctors’ professionalism (Sorry.  I can’t comment because I can’t stop laughing).
  • Pronovost has a more radical piece of common sense to offer. He proposes that the United States create an agency that would do for medicine what the Securities and Exchange Commission does for securities markets: compile and audit information about the performance of hospitals, and make it public. (Yeah, that is what we need.  Another government agency.  Looks like this Ivory Tower douche needs to start seeing real patients again).

Beggars can’t be choosers.  I am stoked that the NYT at least addressed this bogus trend which the government and insurers have unfortunately forced upon doctors.   I won’t point out my fixes yet because I  will need so many more blogs in the future to do that.  🙂

Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  12 comments for “The P4P Fallacy Continues

  1. pjb
    January 31, 2013 at 11:35 pm

    Every time I hear Pay for Performance, I have a strange urge to get out a saxophone and lay the case on the ground outside my office and wail away. Surely some meaningless criteria can be met by checking boxes on a form, and I can generate code for it, perhaps a hearing screen. Could justify the now worthless music degree. Am I the only one?

    • Doug Farrago
      February 1, 2013 at 6:49 am

      Love it.

  2. January 30, 2013 at 11:26 am

    Doug, don’t limit you response to throwing cold water on clueless commentators. Let us know what you would do. If you make sense (as I am sure you would), then all of us who respect you could add our voices and maybe, just maybe, make at least a little improvement.

    • Doug Farrago
      January 30, 2013 at 11:31 am

      I have been over the years in my blogs. And will continue to do so……

  3. J. R. Johnson
    January 30, 2013 at 10:58 am

    Gotta disagree with you here: “This is not solved with more government which has NEVER shown to bring down prices for anything).” The reason healthcare is more cost effective in many other countries is that their governments have put cost/price controls in place. The reason the U.S. system is so expensive is because of the large amount of profit taking that occurs due to a lack of price controls. I always found it ridiculous that the government will allow patents on medications (such as Viagra) without putting in price controls. If the supply and demand equation is fudged by granting a patent which eliminates competition but does not control price, is it really a surprise that price gouging then occurs? The German healthcare system in particular has many features that I think could be implemented here and would result in more cost effective care without having the government own the health insurance companies or providers. Since only 10% of the healthcare dollar spent in this country goes to physician reimbursement, I think much of the profits in the system can be pared down without adversely affecting physicians. I would start with health insurance companies, drug manufactures and healthcare system executive compensation. N.B. As a busy internist I fully admit my physician bias.

    • Doug Farrago
      January 30, 2013 at 11:33 am

      I agree 100% with your last sentence. Only if we physicians break free from their shackles (including the gov’t) will things get fixed and real competition/supply and demand occur. Lastly, other countries have different cultures which don’t abuse FREE.

    • Pat
      January 30, 2013 at 4:17 pm

      J.R., can you cite examples where price controls have led to reduced prices AND stable or increased supply? Why should price controls be attached preferentially to some inventions i.e. Viagra? Who are any of us to preemptively constrain a lawful innovation? And how do you define “gouging”, as opposed to a “real” market price? As an internist, I know damn good and well you don’t pick an antibiotic or antihypertensive arbitrarily; why then be so easy with economic pronouncements?

      Familiar with the “stacking” get-around solution of hospital administrators in Britain? After complaints of ER wait times, ambulances were told to wait in the parking lot with patients onboard, to fudge the numbers. Ohio is still the hip-replacement of Canada. Medicare has not been originally solvent since 1972. How is more government an improvement?

      • J. R. Johnson
        January 31, 2013 at 4:32 pm

        Please see comment and link above in my reply to Doug.

    • dwa
      January 31, 2013 at 1:06 pm

      “I think much of the profits in the system can be pared down without adversely affecting physicians. I would start with health insurance companies,”

      1. As a physician I would like to agree with you but the evidence does not support this position. A nice analysis in JAMA 1/4/2012 “Where are the healthcare cost savings?” reviews the contribution to healthcare costs of such things as drugs, “million dollar babies” (the perpetual long term ICU patient) and insurance co. profits. If you eliminated the entire profit margin for the top 5 insurance cos. you would save 0.5% of our healthcare cost. Trying to save money on insurance co. profits is no different than giving a z pak for a cold. The meat of the article is that 10% of our patients account for 60-70% of our costs. Those 10 % are diabetes and heart disease patients. A truly well thought out plan based on evidence of where we spend our money would focus our limited financial and personnel resources on identifying and providing early care to those illnesses. Based on the evidence, I can’t agree with your last sentence.

      2. I wish the authors of that study, or someone, would try to quantify the cost of technology on our healthcare system and compare it to Britain, etc. I have to think that the reality of all the ct scans, MRIs, PET scans, CABG’s, stents as well as how we use them in the U.S. has to be a major contributor. Have not seen this study done. The difficulty is that the patient/medicolegal expectation is that the technology be used and physician’s are held accountable to this in every single instance. Just as you have a VQ mismatch in a PE..we have a technologyexpectation/resource mismatch in our healthcare system.

      3. Your comment on price controls is quite accurate for the path we are currently going down. Romneycare, the model for obamacare, has just led the state of massachusetts to institute price controls. JAMA 9/26/2012. “Controlling healthcare costs in Mass. with a global spending target”..regarding healthcare providers..”the commission may encourage, cajole and if needed, shame them into doing their part to control costs.” This assumes of course that the state has completely accurately determined what is needed to actually take care of people…vs what the state feels like it wants to spend…I think we all can figure out who is going to come out on the short end of that decision.

      • J. R. Johnson
        January 31, 2013 at 6:19 pm

        You incompletely quoted me. I had included drug manufacturers and healthcare system executive compensation in the list as well. The list was not meant to be prioritized and I am sure it is incomplete.

        1) It is interesting that 10% of the patients incur 60-70% of the costs. However, that does not address how much of those costs are profits to the drug manufacturers, healthcare systems, etc. If we compare our U.S.A system to other systems we do not rank on top with either cost effectiveness or quality. My broader point(with my admitted pro-physician bias) is that there should be ways to become more cost effective without picking on physicians.

        2) Agree that technology and medico-legal concerns are factors which drive up healthcare costs in the U.S.A. In my opinion, it is exactly the two areas of price controls and malpractice reform where Obamacare did not go far enough.

        3) I believe government regulation of healthcare to be necessary just as it is in many other industries. Regulation can be done poorly or can be done well. If we use quality and cost effectiveness as our goals, the examples of Israel and Germany (see above comments discussion with Doug) show that our current system is not the best at achieving those goals. My conclusion is that better (not necessarily more)regulation would help us improve.

        • dwa
          February 1, 2013 at 2:25 pm

          read your referenced article. The difficulty I see is the comparison of Israel to the United States in a couple fashions. First, in general, Israel has a very small population in comparison to the United States. Just as we cannot blindly accept the results of a study with 100 participants as a universal truth I would be hesitant to blindly accept Israel’s experience as being completely representative of the outcome of that system in the United States. Second, a quick perusal of obesity rates on google gives a 37.5% rate in U.S. vs a 13-22.9 % rate in Israel. Again, I am very hesitant to extrapolate Israel’s results to our entire population and think we are going to get the same results given obviously significant differences in the “study population”. I am also firmly convinced that the incredible workload and efficiency that our providers, especially primary care and nurses, achieve in volume (=access) is going to be severely diminished when the hammer of another 35 million patients with their accompanying government regulatory burdens and penalties falls on the system. Given the additional illogical burden of our already maxed out healthcare system caring for another 35 million people with significantly fewer resources (sig. lower reimbursement if not outright price controls), the most logical outcome is an exit and decrease in providers with the associated decrease in access, safety and quality of care…damage to our system and patients.

          I don’t know that there is a significant amount of experience to think that our government has a track record of providing any large scale experience of “government regulation done well”. In fact, I believe the obvious conclusion (given the examples of lack of production and adherence to something as simple as a budget, fannie and freddie efforts, esp. in healthcare…SGR forumla) is just the opposite. You stand a much higher risk of incredibly poor regulatory efforts causing severe adverse reactions and damage to our healthcare infrastructure…both personnel and physical. The risk severely outwieghs the potential benefit in this instance.

          I’m sorry, I did not completely address your quote in reference to excess profit. The referenced JAMA study does address “generic drugs” as a potential cost savings and again shows a trivial benefit in the context of our system..about 0.5%. I would propose that if we have strong evidence that eliminating the ENTIRE PROFIT MARGIN of the top 5 insurance companies (which would never happen…maybe 30% is optimistically realistic?)would save only 0.5% of our healthcare costs, we can extrapolate that eliminating the entire profit margin of healthcare executives, drug companies and insurance industries would save..??2-4%?? of our healthcare cost. Obviously the entire profit margins could not be eliminated so it would likely be in the neighborhood of 1-2%?..wish I had a study that gave those numbers definitively but given the info we do have on insurance cos and generic drugs I’m willing to bet it’s in that neighborhood. I would say that is not significant in the context of our problem..not to mention the vacuum of talent and skill that would be created by actual people that would no longer be getting paid to work in very difficult situations. (Our local hospital’s lack of consistent, effective CEO leadership and subsequent consequences has driven this point home.

          I will say that I am not opposed to significant government involvement or “direction” n our healthcare system if it shows logical thought based on the evidence we have. This is not the situation we have however. 10 % of our population takes up 60-70% of our resources. Our focus needs to be there. It is not. Randomly broadcasting your limited resources on the entire population with universal care, many of whom are not ill, takes away from the resources you have to take care of the population that actually is ill and using up all your resources..monetary, physical, and personnel. Our resources need to be focused on where the actual studies show we are spending and losing our money. Diabetes, prediabetes, heart disease, markedly high cholesterol needs to be identified early, access given to that population and focused care to be given there. Money and resources, not to mention lives, will actually be saved, where studies show the majority of real problems are, and those savings then applied to other areas. This is not the course that has been laid out for us

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