Is health care better when you pay more?

In a New York Times article today, Reed Abelson makes the bold statement that a new hospital study provides “stark evidence” that higher payments do not translate to better medical care. He is citing a Pennsylvania government study of the 60 hospitals in Pennsylvania that perform heart bypass surgery. Two of the highest paid hospitals also had the highest death rates. This could be for many reasons. These hospitals might take the most difficult cases or the most costly. Either example would cause higher costs and poorer results.

So, the study is too narrow to make sweeping generalizations about health care costs, but it does raise some questions. Noting that this particular study does not prove much, Abelson goes on to say, “Still, the Pennsylvania findings support a growing national consensus that as consumers, insurers and employers pay more for care, they are not necessarily getting better care. Expensive medicine may, in fact, be poor medicine.”

Implied in the article is a call to adopt a pay-for-performance model for health care. The idea is that physicians and hospitals with better outcomes would receive higher pay. On the surface, this seems like a good idea, but there are potential problems. One way to improve outcomes is to deny service to high-risk patients. Abelson’s article notes that Geisinger Health Care is offering a 30-day warranty on its cardiac surgery. Private hospitals are able to choose the best candidates for surgery and have a much better chance of making good on the warranty.

Public hospitals face other dilemmas. Hahnemann University Hospital now says that its record keeping probably did not give an accurate picture of how sick its patients were before coming for surgery. Public hospitals and teaching hospitals take all patients and do their best to save them. Those with the sickest patients are likely to have the worst outcomes. This is not proof of poor care.

The question of how to compare care at different facilities or among different doctors is not one easily answered. Most will agree that better performance should be rewarded, but getting an accurate picture of care quality will require more than counting deaths and dollars. Dr. Richard Snyder of Independence Blue Cross, is quoted as saying, “Philosophically, you’re not going to get an argument from us. We believe we should pay more for high quality than poor quality.” Implicit in his statement is frustration over how to measure quality. Recognizing the complexity of the question is the first step to formulating possible answers.

One thought on “Is health care better when you pay more?

  1. Drubicle 20/06/2007 / 11:19 am

    In response to the second part of your entry, I’d say the pay-for-performance way of going about this is pretty flawed. The horror scenarios you mention would easily transition into bleak reality. I feel that quality of care should be decided from the bottom up, starting with the individual to assess whether he or she received quality care (rather than some third party diagnosing the outcomes of a doctor in dealing with his patients). I think Canada is on the right track with that. While they have a universal healthcare system, they can choose their primary care physician. The physician who sees more patients gets paid more. Thats seems like a pretty good incentive for doctors who participate in a universal healthcare system. Also, the patient wouldn’t be a “repeat customer” if he/she wasn’t satisfied with the doctor. But I don’t know how they assign doctors when a patient needs specialized care.

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