Why Physician Quality Incentives Don't Work

June 4, 2015

Pay-for-performance programs often set up complex metrics to define quality, when simple solutions to the initial problem would be far more effective.

A spate of recent studies show that the numerous institutional programs incentivizing physicians to improve quality, effectiveness, and to reduce adverse outcomes are not working. The articles and columns analyzing the analysis will be coming in a flood.

The studies' consensus is that "physician behavior" did not change.

I strongly disagree.

Physician capabilities did not change.

These hospital system, government, and insurer "pay-for-performance" programs are like taking 100 people who can do arithmetic in their heads and offering them $100 each if they perform the functions you deem important more quickly, accurately, and efficiently.

Their focus will shift to the metrics that deliver rewards and give less to those that do not. The average and above cyphers won't do any better and the below average will so somewhat better. Everyone takes longer to do the same amount of tasks.

Add complex measurement rules, and potential results degrade further.

The results of these institutional programs like our example are not at all surprising because they all miss the obvious: equipping everyone with a $2 calculator would have been far more effective.

It's just common sense.