A NEW STUDY CONFIRMS an old truth: You get what you pay for. And findings from the study are as startling as they are encouraging. Nearly 70,000 lives would be saved and hospital costs could be reduced by $4.5 billion if hospitals nationwide achieved improvements that hospitals in a Medicare pay for quality project have already realized.
Hospitals in the study improved by approximately 50 percent in delivering every evidence-based quality measure to their patients. Moreover, the average hospital cost per patient decreased by more than $1,000 during the time period under study.
The recently released study finds that hospitals provide better patient care when they track and report their performance, and are measured and paid for delivering evidence-based quality care. The findings may seem obvious until one considers that Medicare today pays based on the number of procedures performed, not on whether they are delivered in the highest quality way.
The study is based on the performance of 250 hospitals, treating more than 8 percent of Medicare’s patients, participating in a Medicare demonstration program that the Premier hospital alliance undertook in collaboration with the federal government.
The demonstration tracks hospitals’ delivery of the best practices in healthcare. The project measures performance in processes and outcomes in five clinical areas: heart attack, open heart surgery, hip and knee replacement, pneumonia and heart failure. For the past four years, the hospitals in the project have demonstrated a continuous and sustained improvement on all measures.
The New England Journal of Medicine recently compared hospitals in the Medicare “pay-for-performance” demonstration project with hospitals that relied solely on public reporting of hospital performance on the quality metrics. The study found that hospitals paid incentives outperformed the hospitals that only publicly reported results, finding that “pay-for-performance hospitals showed significantly greater improvement than did control hospitals in seven of the 10 individual measures of performance.” Additional research suggests that from 27 percent to 43 percent of the quality improvements were attributable to the bonus payments. And this performance differential has continued to grow larger.
One might ask why this program is necessary. After all, isn’t delivery of the highest quality care what all Americans expect and deserve? Having run hospitals for 30 years, I know the challenges of the job first-hand. Care is enormously complex, and every patient poses a unique situation. Innovation is constant, and physicians can be resistant to care that some perceive to be “cookbook medicine.” And with the financial challenges hospitals continuously face, it is difficult to stay ahead of the day-to-day routine.
But quality improvement depends on a willingness to change and a drive to always push the bar higher. Incentives help force this change. What Premier has found in this program is that high-performing hospitals make quality a top priority from the hospital board on down, and they actively involve physicians every step of the way.
Beyond the individual hospitals, creating a common evidence-based goal helps drive collaboration across the healthcare system, overcoming the fragmentation of healthcare services as America’s 5,000 community hospitals work to improve on the quality metrics. They share best practices and continuously improve through lessons learned.
Based in large part on this evidence, Congress is considering legislation to implement a pay-for-performance program nationally. The proposal from the Centers for Medicare & Medicaid Services would reward high-performing hospitals for meeting certain quality-of-care benchmarks for Medicare patients.
Paying for quality achieves a higher level of performance in American hospitals and helps to address one of the disconnects in the current Medicare payment system – rewarding the volume of procedures irrespective of the quality of care. Moreover, this performance has saved thousands of lives of patients treated in those hospitals. It is also associated with reducing hospital costs in treating those patients, which ultimately can drive healthcare costs down overall.
Congress needs to act this year to enact a carefully designed program that links pay to quality for all hospitals. There should not be a delay in taking steps to realign the incentives in the healthcare system. It will provide benefits for patients, hospitals and the nation’s healthcare system.
Richard A. Norling is president and CEO of the Premier healthcare alliance.