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Collateral Damage: Pay-for-Performance Initiatives and Safety-Net HospitalsCollateral Damage: Pay-for-Performance Initiatives and Safety-Net Hospitals

Steffie Woolhandler, MD, MPH; and David U. Himmelstein, MD
[+] Article, Author, and Disclosure Information

This article was published online first at www.annals.org on 8 September 2015.

From City University of New York School of Public Health at Hunter College, New York, New York.

Disclosures: Disclosures can be viewed at www.acponline.org/authors/icmje/ConflictOfInterestForms.do?msNum=M15-1393.

Requests for Single Reprints: Steffie Woolhandler, MD, MPH, City University of New York School of Public Health at Hunter College, 255 West 90th Street, New York, NY 10024; e-mail, swoolhan@hunter.cuny.edu.

Current Author Addresses: Drs. Woolhandler and Himmelstein: City University of New York School of Public Health at Hunter College, 255 West 90th Street, New York, NY 10024.

Ann Intern Med. 2015;163(6):473-474. doi:10.7326/M15-1393
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In this issue, Gilman and colleagues report an analysis that suggests that the amount Medicare's pay-for-performance program has diverted from the safety-net hospital so far is modest. The editorialists explain why they believe that these estimates are conservative and why even modest sums may be important for low-margin institutions.

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Robert McNamara's legacy in health care
Posted on September 7, 2015
Mitchel L. Galishoff, MD
Valley Medical & Surgical Clinic, PC
Conflict of Interest: None Declared
The Late Secretary of Defense under the Kennedy-Johnson administrations, Robert McNamara, applied the concept of systems analysis to the conduct of the Vietnam War. As one of the Harvard "wiz kinds" he applied statistical analysis to the fighting in order to create a more efficient, limited, controlled engagement.

Despite the horrid failure of this endeavor it seems our government is entrapped by his legacy and has seen fit to apply these basic principles to numerous areas including education and medicine.

During the Vietnam era there was "promotion for performance" wherein post-engagement statistics had to be reported. How many American lives were lost in trying to examine the battlefield to collect this data? How much data was fictitious and distorted?

Woolhandler et. al. have just scratched the surface of the wrongheadedness of "pay for performance." In addition to the socioeconomic limitations penalizing we who care for the poor and undeserved, there will be the usual statistical GIGO (garbage in - garbage out) that will taint the metadata.

There will also be an unprecedented opportunity for fraud and abuse in a complicated computer-run system doling out rewards and punishments based on the submitted data.

Decades ago we watched the fall of Saigon despite favorable battlefield statistics. The same is happening in education and will happen in medicine.

Perhaps we should first be required to report simple outcomes such as the number of "kills" and "probables."
Author's Response
Posted on November 6, 2015
Steffie Woolhandler, MD, MPH, David Himmelstein, MD
City University of New York
Conflict of Interest: None Declared
Dr. Galishoff points to McNamara's "body count" driven Vietnam War planning as an early, failed example of a P4P-like strategy. We agree.

Medical P4P rests on several dubious assumptions . (1) That quality metrics accurately reflect clinicians' performance, not the characteristics of their patients, or efforts to game the measures; (2) That lack of motivation is an important cause of poor performance; (3) That bonuses and penalties will add to motivation, not undermine it; (4) That hospitals and physicians delivering poor quality care should get fewer resources; and (4) That the current payment system is too simple. None of these assumptions rests on evidence.

While process-based quality metrics (e.g. mammography rates) are easy to tabulate, they're poor proxies for real quality. Death or disability rates are the most salient indicators, but they're profoundly influenced by factors that are beyond clinicians' control. At present, performance metrics don't reliably separate the “signal” of medical quality from the “noise” of other factors. Hospital mortality rates provide a best-case scenario for assessing performance: time horizons are short, deaths are frequent, and vast troves of hospital data offer an ideal substrate for statistical analysis. Nonetheless, widely-used risk-adjusted hospital mortality metrics yield wildly different quality rankings, and show little relationship to expert clinicians' assessments based on chart review .

Moreover, financial incentives often lead hospitals and doctors to slant their documentation (e.g. through upcoding), corrupting the data and uncoupling reward from actual performance. Such efforts also squander doctors' time, and divert our focus; at our hospital, sessions devoted to instruction on ICD10 coding are mandatory, while attendance at grand rounds is optional.

P4P also flies in the face of growing evidence from behavioral economics that penalties and bonuses often undermine pre-existing motivation and worsen performance on complex cognitive tasks.

P4P penalties drain resources from already struggling safety-net institutions . Clinicians struggle with electronic health records optimized for billing and quality reporting, but ill-suited to patient care . And hospital administrative costs - which now consume one-quarter of total hospital budgets - continue to rise .

P4P augments external control of the doctor/patient encounter, vesting power in managers who have scarcely touched blood, death or despair. Like McNamara in Vietnam, payers and bureaucrats push ahead with P4P, undaunted by mounting evidence of failure.

Steffie Woolhandler, M.D., M.P.H.
City University of New York School of Public Health at Hunter College

David U. Himmelstein, M.D.
City University of New York School of Public Health at Hunter College

Himmelstein DU, Ariely D, Woolhandler S. Pay-for-Performance: Toxic to Quality? Insights from behavioral economics. Int J Health Serv 2014;44:203-214.
Hogan H, Zipfel R, Neuburger J, Hutchings A, Darzi A, Black N et al. Avoidability of hospital deaths and association with hospital-wide mortality ratios: retrospective case record review and regression analysis. BMJ 2015; 351 :h3239
Gilman M, Hockenberry JM, Adams EK, Milstein AS, Wilson IB, Becker ER. The financial effect of value-based purchasing and the Hospital Readmissions Reduction Program on safety-net hospitals in 2014. A cohort study. Ann Intern Med. 2015;163:427-36.
Rosenbaum L. Transitional chaos or enduring harm? The EHR and the disruption of medicine. N Engl J Med 2015; 373:1585-1588
Himmelstein DU, Jun M, Busse R, Chevreul K, Geissler A, Jeurissen P, Thomson S, Vinet M-A, Woolhandler S. A Comparison Of Hospital Administrative Costs In Eight Nations: US Costs Exceed All Others By Far. Health Aff September 2014 33:1586-1594.

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