It goes by several names: “pay for performance” (a.k.a. “P4P”), “value-based purchasing.” The concept is that rather than paying for health care based solely on the volume of services performed, payment is based at least in part on some measurable result, with a goal of increasing quality and decreasing cost (i.e., greater value). In one of the more ambitious P4P initiatives to date, New York City recently announced that 2.5% of the pay for the 3300 physicians employed at the city’s 11 public hospitals will be based on achieving certain quality metrics. CSG has P4P programs with both our commercial and government payers; we even have one with our own employee health plan.
There are many aspects of P4P that appear to affect its effectiveness and acceptability. But recently, there has been a debate about whether physicians even respond to financial incentives. Both skeptics and supporters of P4P can find evidence to support their view, as results of research have been mixed. Yet can it be true that physicians are actually above all that, that our motives are too pure for our practice to be affected by money? In a New York Times op-ed about the NYC P4P proposal, Bill Keller argues essentially that. Many of the posted comments about the piece are from physicians, who argue that they are not affected by financial considerations, and would practice high-quality medicine if administrators and payers would simply get out of the way. One commenter noted that not only do incentives not work, but if P4P leads to lower salaries, there will be fewer individuals choosing to go into the affected specialties. Hmmm. If physicians choose a specialty at least in part based on compensation, that seems to me a way of responding to financial incentive!
Indeed, there is evidence that we are just like everyone else in that we do change our practice in response to monetary considerations. Lowenstein et al. provide several examples, including increased administration of higher cost drugs by oncologists who are reimbursed for them, and changes in rates of procedures depending on whether payment is fee-for-service or capitated. But it really is complex, in that the decisions of physicians, as for most professionals, are driven not only by financial but by numerous other considerations. Both Lowenstein and Cassel argue that money, while a factor, is not the most important one. Fidelity to the patient, professional pride, and competitiveness are also key drivers.
Whether we like it or not, some form of P4P will be an increasing part of our future. But that doesn’t have to be threatening. We could fight against the very idea that we can be swayed by financial incentives. Or we can be part of figuring out how to make it work – defining the right incentives, both monetary and non-monetary, and the outcomes to be achieved – so that our patients will get the best quality at the lowest cost. That will help us preserve both patient value and our professional values.