The Patient Charter for Physician Performance Measurement, Reporting and Tiering Programs, developed by the Consumer-Purchaser Disclosure Project reflects one of the larger coalitions pushing for value-based purchasing, by all those who are customers of medical care.  Aetna recently announced its support of the effort, which aims at combining transparency by or about medical care and providers, as well as improving the performance and value of the healthcare delivery system. [“Aetna Supports Patient Charter for Physician Performance Measurement, Reporting and Tiering Programs” Aetna Apr 1, 2008]

I recall when I was a hospital system executive in my last position before retiring what was meant by physician performance from the system’s perspective.  My marketing/strategy division was, at that time, responsible for the system’s “physician relations” program, which relied mainly on a handful of “account representatives” who visited physicians on the medical staff to make sure things were working well for them when they admitted or referred patients to our hospitals.

We measured the success of this relationship management program entirely through the numbers of patients that the physicians involved admitted or referred.  Initially, we lacked the ability to determine how profitable such patients were, but the intent was to learn, in effect, how profitable the physicians were, given the profitability of the patients they admitted.  With such profitability increasingly in question now, thanks to physicians developing their own competing hospitals and ambulatory surgery or care centers, this is an even bigger issue today.

Within physician practices, particularly large, multi-specialty group practices, similar measures of the profitability, as well as quality performance of members are typically included in measurement efforts.  Productivity, measured in terms of total billed charges and procedures, as well as adherence to evidence-based medicine and payer-sponsored “pay-for-performance” (P4P) criteria, are also logical measures.

I recall one interesting performance measure that a medical group I consulted with had used.  If any subspecialty physicians within the group proposed that it invest in an expensive piece of equipment for diagnosis or treatment, the physicians who proposed it would become responsible for making sure the investment paid off.  If the revenue they produced through use of the equipment failed to cover the costs of having it, the physicians would be “fined” the equivalent of the losses when it came time to split the practice’s revenue among its members.

This was intended to ensure that group physicians were on the conservative side when it came to proposing investments.  It also had the natural tendency of such physicians to make sure their “hammers” were used, making even more patients’ conditions look like “nails”.  Whether it promoted overuse, unnecessary use, etc. cannot be known without careful analysis, but the potential would certainly be there.

With payers involved, P4P measures of performance tend to reflect adherence to evidence-based quality in physicians’ care of patients, but often more importantly, their “efficiency”.  This may tend to give too much weight, in overall ratings of and bonuses paid to physicians, on how low physicians keep the costs of care that insurers must pay, and physicians have typically bridled at such a payer-serving definition of performance.

Some insurers, with Regence Blue Shield in the Pacific Northwest coming to mind, have been working on measuring, reporting, or rewarding physicians based on how well each manages the health and particularly the diseases of patients.  Such an approach to P4P might well serve primary physicians especially well for their “medical home” performance, and remove some of the pressure on them to see as many patients and deliver as many billable services as possible just to survive.

It is clear that however payers, consumer groups, and physicians, themselves, define, measure, and reward or punish performance will have a great deal to do with how medical care is delivered.  One can at least hope that paying for and publishing performance measures will first and foremost serve the best interests of patients and the community, though it will also have to serve the interests of payers and physicians.  The challenge is to align the incentives and performance measures used by all stakeholders.