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• W2100038971 abstract "Over the past 30 years, research exploring the causes and consequences of geographic variations in practice has called into question widely held assumptions about the relationship between spending and quality. Two-fold differences in spending are observed across U.S. regions that are not due to differences in illness or to the prices charged by providers. Rather, higher spending is due primarily to greater use of “supply-sensitive” services: the frequency of visits to physicians and referrals to specialists, the amount of time similar patients spend in the hospital, and the frequency of imaging, tests, and minor procedures. The paradox, however, is that greater use of these services has been shown to be associated with lower quality, no gain in survival, and worse physician and patient-reported quality of care. It may be possible, therefore, to lower spending while improving quality. But this will require addressing the underlying causes of the variations: overuse of discretionary services in a fee-for-service system that ensures that physicians stay busy and that existing capacity remains fully deployed. These findings point to 3 strategies that will be required for pay for performance to achieve its potential: fostering local organizational accountability for the overall quality and costs of care—and for the capacity of the local delivery system; adoption of comprehensive longitudinal performance measures—to reassure the public that lower spending is compatible with higher quality care; and fundamental reform of the payment system. Over the past 30 years, research exploring the causes and consequences of geographic variations in practice has called into question widely held assumptions about the relationship between spending and quality. Two-fold differences in spending are observed across U.S. regions that are not due to differences in illness or to the prices charged by providers. Rather, higher spending is due primarily to greater use of “supply-sensitive” services: the frequency of visits to physicians and referrals to specialists, the amount of time similar patients spend in the hospital, and the frequency of imaging, tests, and minor procedures. The paradox, however, is that greater use of these services has been shown to be associated with lower quality, no gain in survival, and worse physician and patient-reported quality of care. It may be possible, therefore, to lower spending while improving quality. But this will require addressing the underlying causes of the variations: overuse of discretionary services in a fee-for-service system that ensures that physicians stay busy and that existing capacity remains fully deployed. These findings point to 3 strategies that will be required for pay for performance to achieve its potential: fostering local organizational accountability for the overall quality and costs of care—and for the capacity of the local delivery system; adoption of comprehensive longitudinal performance measures—to reassure the public that lower spending is compatible with higher quality care; and fundamental reform of the payment system. It is a great pleasure to honor Robert Moreton, an eminent gastrointestinal radiologist, who trained and worked in several of our leading medical organizations, including the Mayo Clinic, the Scott & White Clinic, and the M. D. Anderson Cancer Center. The world of medicine has changed dramatically in the years since he was in practice. And I'm pretty sure that if he were with us, he would agree, as the Apollo 13 astronauts put it, that we've got a problem. We face a number of challenges. Quality is variable, and often poor. Access to care is worsening for many. Our delivery system is increasingly fragmented, especially for those with chronic disease. Promising technologies are on the horizon, but many worry that they will be unaffordable. Physicians are increasingly dissatisfied with their work. And, last but not least, health care costs are rising dramatically. The threat posed by rising health care costs has been highlighted by US government leaders. In 2002, the undersecretary of the treasury, Peter Fisher, said,Think of the United States Government as a gigantic insurance company with a sideline business in national defense. … This particular insurance company has made promises to its policy holders that have a current value $20 trillion in excess of the revenues it expects to receive. … It is an accident waiting to happen. David Walker, comptroller general of the United States, recently updated these estimates. Our unfunded liabilities are now $50.5 trillion, a bit more than the total net worth of all US households. Most of the shortfall is due to the expected rise in costs for federal health care programs. Mr Walker and many others believe that these rising costs pose a serious threat to our national security and must be addressed. In this context, current pay-for-performance initiatives are a bit like rearranging the deck chairs on the Titanic. I will argue this morning that we need to rethink our approach. Over 30 years ago, as a first-year medical student, I was given a copy of Wennberg and Gittelsohn's [1Wennberg J. Gittelsohn A. Small area variations in health care delivery.Science. 1973; 182: 1102-1108Crossref PubMed Scopus (1369) Google Scholar] seminal article on small area variations in health care delivery in Vermont. They revealed dramatic variations in both practice and spending across similar communities in that remarkably homogeneous state: greater than six-fold variation in per capita rates of surgery and nearly two-fold differences in spending. I had the good fortune to join Wennberg in 1986, hoping to explore both the causes and consequences of these variations. We began to produce the Dartmouth Atlas of Health Care, in which we use data on where Medicare beneficiaries receive care to divide the country into 306 hospital referral regions, within which almost all of the care for the resident population is delivered by the hospitals and physicians located within those regions (Figure 1). We then use Medicare data to compare rates of utilization and spending across these regions. Figure 2 presents an example. Each blue dot represents the age-sex-race adjusted rate and race-adjusted rate of per capita Medicare spending in one of the 306 regions. The red dots show the rates for 4 selected regions. There are two-fold differences between Miami and Minneapolis, and nearly two-fold differences between San Francisco and Los Angeles. These differences aren't due to differences in illness levels or prices [2Fisher E.S. Wennberg D.E. Stukel T.A. Gottlieb D.J. Lucas F.L. Pinder E.L. The implications of regional variations in Medicare spending Part 1: the content, quality, and accessibility of care.Ann Intern Med. 2003; 138: 273-287Crossref PubMed Scopus (1220) Google Scholar]. More recently, we have developed methods to compare utilization and spending for patients with severe chronic illness, focusing on patients with chronic diseases who are in their last 2 years of life. Because patients are highly loyal to their hospitals and physicians when they are seriously ill, we can now compare performance across specific hospitals [3Wennberg J.E. Fisher E.S. Baker L. Sharp S.M. Bronner K.K. Evaluating the efficiency of California providers in caring for patients with chronic illnesses. Health Aff (Millwood) 2005.http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.526Google Scholar, 4Wennberg J.E. Fisher E.S. McAndrew M. The care of patients with severe chronic illness: a report on the Medicare program by the Dartmouth Atlas Project. Dartmouth College, Hanover, NH2006Google Scholar]. The blue dots represent US teaching hospitals, the red dots the top 10 “honor roll” centers (based on U.S. News and World Report). Again, we see that spending varies dramatically. Uwe Reinhardt asked the key question about these data: how can the best medical care in the world cost twice as much as the best medical care in the world? I'll do my best to answer that question by summarizing work by a large group of investigators with whom I've had the pleasure of working. The remainder of this article is divided into 3 parts: what we know (the relationship between spending and quality, which I refer to as the “paradox of plenty”), what we think we know (how might we explain what's going on), and what I think we need to know (how to build on what we've learned to foster effective reform). Over the past 10 years, we have completed a series of studies examining the implications of these differences in spending for the quality and outcomes of care received by Medicare beneficiaries (Figure 3). We compared the treatment and outcomes of almost 1 million Medicare beneficiaries with acute myocardial infarctions (AMIs), colorectal cancer, and hip fractures and a representative sample of the Medicare population (the Medicare Current Beneficiary Survey). We compared how those in regions with higher spending (and higher intensity patterns of practice) fared compared with those in lower spending regions. We first looked at the content of care in 3 categories [5Wennberg J.E. Fisher E.S. Skinner J.S. Geography and the debate over Medicare reform. Health Aff (Millwood) 2002.http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w2.96Google Scholar]: effective care (evidence-based services that all patients with a specific clinical indication should receive), preference sensitive care (treatments in which trade-offs are involved, such as the choice between coronary bypass surgery and medical therapy), and supply-sensitive services (services such as the frequency of physician visits or hospital stays, for which the local supply of resources has been shown to be a powerful determinant of utilization rates). Overall, the use of effective care (which can also be understood as “technical quality”) was somewhat worse in higher spending regions and hospitals [2Fisher E.S. Wennberg D.E. Stukel T.A. Gottlieb D.J. Lucas F.L. Pinder E.L. The implications of regional variations in Medicare spending Part 1: the content, quality, and accessibility of care.Ann Intern Med. 2003; 138: 273-287Crossref PubMed Scopus (1220) Google Scholar, 6Baicker K. Chandra A. Medicare spending, the physician workforce, and beneficiaries' quality of care. Health Aff (Millwood) 2004.http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.184Google Scholar]. For example, the proportion of patients with AMIs receiving reperfusion therapy within 12 hours was lower in higher spending regions than in lower spending regions. The same was true for 4 of 6 measures of quality for AMI care and 3 of 4 preventive measures. These data are consistent with state-level studies of the relationship between spending and overall quality reported by Baicker and Chandra [6Baicker K. Chandra A. Medicare spending, the physician workforce, and beneficiaries' quality of care. Health Aff (Millwood) 2004.http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.184Google Scholar]. Those in higher spending regions don't receive more elective surgery (preference-sensitive care), such as hip or knee replacements, back surgery, or coronary artery bypass grafting after AMIs [2Fisher E.S. Wennberg D.E. Stukel T.A. Gottlieb D.J. Lucas F.L. Pinder E.L. The implications of regional variations in Medicare spending Part 1: the content, quality, and accessibility of care.Ann Intern Med. 2003; 138: 273-287Crossref PubMed Scopus (1220) Google Scholar]. Rather, the differences in spending are almost entirely due to “supply-sensitive services”: the frequency of visits to physicians, how much time similar patients spend in the hospital, and differences in other discretionary services such as imaging, diagnostic tests, and minor procedures [2Fisher E.S. Wennberg D.E. Stukel T.A. Gottlieb D.J. Lucas F.L. Pinder E.L. The implications of regional variations in Medicare spending Part 1: the content, quality, and accessibility of care.Ann Intern Med. 2003; 138: 273-287Crossref PubMed Scopus (1220) Google Scholar, 5Wennberg J.E. Fisher E.S. Skinner J.S. Geography and the debate over Medicare reform. Health Aff (Millwood) 2002.http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w2.96Google Scholar]. In terms of health outcomes, we found that mortality rates in higher spending regions and hospitals were slightly worse than in lower spending delivery systems [7Fisher E.S. Wennberg D.E. Stukel T.A. Gottlieb D.J. Lucas F.L. Pinder E.L. The implications of regional variations in Medicare spending Part 2: health outcomes and satisfaction with care.Ann Intern Med. 2003; 138: 288-298Crossref PubMed Scopus (1051) Google Scholar]. Studies comparing physicians' perceptions of their ability to provide high-quality care present a similar picture. Physicians in higher spending regions are more likely to report that the continuity of their relationships with patients and their communication with other physicians are inadequate to support high-quality care. On average, physicians in higher spending regions are more likely to report difficulty providing high-quality care [8Sirovich B.E. Gottlieb D.J. Welch H.G. Fisher E.S. Regional variations in health care intensity and physician perceptions of quality of care.Ann Intern Med. 2006; 144: 641-649Crossref PubMed Scopus (84) Google Scholar]. Beneficiary satisfaction with care was no better in high-spending regions, and perceptions of the accessibility of care were somewhat worse in high-spending regions [7Fisher E.S. Wennberg D.E. Stukel T.A. Gottlieb D.J. Lucas F.L. Pinder E.L. The implications of regional variations in Medicare spending Part 2: health outcomes and satisfaction with care.Ann Intern Med. 2003; 138: 288-298Crossref PubMed Scopus (1051) Google Scholar]. Perhaps most worrisome was our finding that spending growth was greatest in higher spending regions (on average) and that in regions where spending growth was greatest, survival after heart attacks improved more slowly over recent years than in regions where spending growth was slowest [9Skinner J.S. Staiger D.O. Fisher E.S. Is technological change in medicine always worth it? The case of acute myocardial infarction.Health Aff (Millwood). 2006; 25: w34-w47Crossref PubMed Scopus (117) Google Scholar]. These findings point to a troubling paradox. Higher spending is due largely to the greater use of a category of care in which we receive little guidance from evidence or textbooks: the frequency (among similar patients) of hospital and intensive care unit stays, physician visits, and specialty consults (and the associated greater use of imaging, tests, and minor procedures). And at the margin at which the US health care system is now operating, more is worse. What might be going on? Our more recent work has focused on trying to disentangle the underlying causes of the differences in spending and spending growth across regions. Some general attributes of the current US health care system must be acknowledged. We tend to assume that more medical care means better medical care. (This assumption is reinforced by those who emphasize the dramatic gains in life expectancy achieved over recent decades, argue that these are due largely to increased health care spending, and conclude therefore that increased spending is “worth it”) [10Cutler D.M. Rosen A.B. Vijan S. The value of medical spending in the United States, 1960-2000.N Engl J Med. 2006; 355: 920-927Crossref PubMed Scopus (303) Google Scholar]. Many now recognize that we have inadequate information on the risks and benefits of common treatments. Vioxx (rofecoxib; Merck & Company, Inc., Whitehouse Station, New Jersey), for example, was introduced without adequate information on its risks and benefits. According to the New York Times, nearly 1.4 million percutaneous coronary interventions are performed each year in the United States (most for stable angina), and it was only last month that we learned that the benefits for those with stable angina are quite modest compared with medical therapy [11Boden W.E. O'Rourke R.A. Teo K.K. et al.Optimal medical therapy with or without PCI for stable coronary disease.N Engl J Med. 2007; 356: 1503-1516Crossref PubMed Scopus (3487) Google Scholar]. Finally, most of us will recognize the growing tension between the traditions of science and professionalism that used to guide academic medical centers and the current world of the marketplace, in which health care is a commodity and academic medical centers must compete along with everyone else. Robin Larson and her colleagues [12Larson R.J. Schwartz L.M. Woloshin S. Welch H.G. Advertising by academic medical centers.Arch Intern Med. 2005; 165: 645-651Crossref PubMed Scopus (51) Google Scholar], for example, studied the advertising practices of leading academic medical centers and found little evidence that ads were reviewed for balance or accuracy, and that many promoted services such as cosmetic surgery. The purpose of the ads was clear: promoting services that would draw well-paying patients to medical centers. These more general attributes of US health care, however, are not likely to explain the regional differences in spending that we have observed. We have examined a number of these factors. Patients' preferences for care vary slightly across regions, but not enough to explain the magnitude of spending differences we see. (For example, Medicare beneficiaries in high-spending regions are no more likely to prefer aggressive end-of-life care than those in low-spending regions [13Barnato AE, Herndon MB, Anthony DL, et al. Are regional variations in end-of-life care intensity explained by patient preferences? A study of the US Medicare population. Med Care 2007;45:386-93.Google Scholar, 14Pritchard R.S. Fisher E.S. Teno J.M. et al.Influence of patient preferences and local health system characteristics on the place of death SUPPORT Investigators. Study to Understand Prognoses and Preferences for Risks and Outcomes of Treatment.J Am Geriatr Soc. 1998; 46: 1242-1250Crossref PubMed Scopus (343) Google Scholar].) Differences in the malpractice environment explain only about 10% of state-level differences in spending and have little impact on differences in the growth in spending across states [15Kessler D.P. McClellan M. Do doctors practice defensive medicine?.Q J Econ. 1996; 111: 353-390Crossref Scopus (386) Google Scholar]. On the other hand, the local capacity of the health care delivery system seems to be important. Resource levels vary dramatically across regions of differing spending levels. Compared with regions in the bottom fifth of spending, those in the top fifth in per capita spending have 32% more hospital beds per capita, 65% more medical specialists, and 75% more general internists [2Fisher E.S. Wennberg D.E. Stukel T.A. Gottlieb D.J. Lucas F.L. Pinder E.L. The implications of regional variations in Medicare spending Part 1: the content, quality, and accessibility of care.Ann Intern Med. 2003; 138: 273-287Crossref PubMed Scopus (1220) Google Scholar]. And data from the Dartmouth Atlas of Health Care show that regions with more cardiologists per capita have more frequent visits to cardiologists (double the physician supply and, on average, the frequency of visits will double). The current fee-for-service payment system not only ensures that physicians stay busy, it also tends to reward high-margin services (such as invasive cardiovascular procedures). When new procedures are introduced, their prices are set to reflect the initial costs, which subsequently fall (while prices remain high), leading to high profit margins. Elyria, Ohio, for example, has for many years had the highest rate of angioplasty in the United States. A New York Times article described how the high financial rewards for performing this procedure led to the rapid growth of the cardiology group in Elyria [16Abelson R. Heart procedure is off the charts in an Ohio city. The New York Times. August 18, 2006.Google Scholar]. But analyses of data from the Dartmouth Atlas of Health Care show that no more than 50% of the variation in spending can be explained by the local supply of resources, leading us to wonder about the importance of local clinical judgment. In several studies using clinical vignettes, primary care physicians in higher spending regions were no more likely to intervene in cases in which evidence was strong (such as chest pain with abnormal stress test results), but much more likely to recommend discretionary treatments (such as more frequent visits or imaging) than those in low-spending regions [17Sirovich B.E. Gottlieb D.J. Welch H.G. Fisher E.S. Variation in the tendency of primary care physicians to intervene.Arch Intern Med. 2005; 165: 2252-2256Crossref PubMed Scopus (54) Google Scholar]. These findings suggest a likely explanation for the dramatic differences in spending across regions and the paradoxical finding that higher spending seems to lead to worse quality and worse outcomes. Current clinical evidence and principles of professionalism are an important, but limited, influence on clinical decision making. Most physicians practice within local organizational contexts and policy environments that profoundly influence their decision making, especially in discretionary settings. Hospitals and physicians each face incentives that will in general reward the expansion of capacity (especially for highly reimbursed services) and the recruitment of additional procedure-oriented specialists. When there are more physicians, relative to the size of the populations they serve, physicians will see their patients more frequently. When there are more specialists or hospital beds available, primary care physicians and other specialists will learn to rely on those specialists and use those beds. (It is more efficient from a primary care physician's perspective to refer a difficult problem to a specialist or admit the patient to the hospital than to try to manage the patient in the context of an office visit, for which payments have become relatively constrained.) The consequence is that what seem to be reasonable individual clinical and policy decisions (given the current payment system) lead in aggregate to higher utilization rates, greater costs, and, inadvertently, worse quality and worse outcomes. The key element of this theory is that because so many clinical decisions are in the “gray areas” (how often to see a patient, when to refer to a specialist, when to admit to the hospital), any expansion of capacity will result in a subtle shift in clinical judgment toward greater intensity. Harm could occur through several mechanisms [18Fisher E.S. Welch H.G. Avoiding the unintended consequences of growth in medical care: how might more be worse?.JAMA. 1999; 281: 446-453Crossref PubMed Scopus (223) Google Scholar]. Greater use of diagnostic tests results both in more labeling and in the detection of abnormalities that would never have caused patients any problem (a condition referred to as “pseudodisease”). The issue is well recognized as a potential problem in computed tomographic screening for lung cancer (along with other biases). Although some advocate screening on the basis of Early Lung Cancer Action Program uncontrolled findings of improved survival of screen-detected cases, the potential for harm is real. And as Bruce Hillman, MD, [19Hillman B.J. CT screening for lung cancer: appearances can be deceiving.J Am Coll Radiol. 2007; 4: 83-85Abstract Full Text Full Text PDF PubMed Scopus (4) Google Scholar] pointed out in his editorial in the February 2007 JACR, radiologists should at least ensure that patients receive balanced information about the risks, benefits, and uncertainties surrounding screening. Greater use of treatments can lead to harm both by lowering treatment thresholds (shifting the balance of risks and benefits) and through tampering (intervening to correct random variation in physiologic measurements). Financial incentives can play an unfortunate role here too. A recent New York Times article described the high levels of payment to physicians for erythropoietin-stimulating agents—and the consequent overuse of the medications. More than half of patients undergoing renal dialysis are achieving hemoglobin levels above those recommended by the US Food and Drug Administration [20Berenson A, Pollack A. Doctors reap millions from anemia drugs. The New York Times. May 9, 2007.Google Scholar]. Finally, as we make diagnoses and provide more treatment, care becomes more complex, and we're more likely to be distracted from the truly important problems faced by our patients. Patients treated at the highest intensity academic medical centers are almost twice as likely to have 10 or more different physicians involved in their care [21Fisher ES, Wennberg DE, Stukel TA, Gottlieb DJ. Variations in the longitudinal efficiency of academic medical centers. Health Aff (Millwood) 2004. Available at: http://content.healthaffairs.org/cgi/content/abstract/hlthaff.var.19v1.Google Scholar]. As more physicians become involved, it will be less and less clear who is responsible for each aspect of a patient's care. Miscommunication and errors become more likely. In sum, I believe that overuse is a consequence of what are in most cases reasonable differences in clinical judgment that emerge in response to local organizational attributes (local capacity and culture) and strong financial incentives that promote unnecessary growth and more care. Current pay-for-performance initiatives are unlikely to overcome these powerful influences, and they have a number of limitations [22Fisher E.S. Paying for performance—risks and recommendations.N Engl J Med. 2006; 355: 1845-1847Crossref PubMed Scopus (75) Google Scholar]. Most pay-for-performance programs focus on measuring the performance of individual providers (eg, physicians, hospitals, nursing homes). This risks reinforcing current fragmentation and lack of coordination and for physicians poses serious technical difficulties (eg, the attribution of a patient's care to a single physician, small numbers of patients for many physicians). And data collection at the individual physician level will be a daunting administrative challenge. Most current measures focus on narrow measures of technical quality and adherence to guidelines, ignoring the key roles of judgment and patient preferences. Many important dimensions of care lack measures at the current time: health outcomes, costs, care coordination. The implementation of pay for performance will be difficult for many physicians, especially those in small office practices. And many are concerned about the potential for harm. If physicians are concerned about the adequacy of risk adjustment, they may avoid sick patients—those who need them most. Safety net providers could be less likely to receive rewards. Many of us are concerned that the emphasis on financial incentives could further undermine the core professional values of altruism that are already threatened by the increasing commercialization of health care. But it's not clear that we have a choice. The Institute of Medicine committee on which I served was fully cognizant of these concerns and advocated moving forward with pay for performance for 2 fundamental reasons. First, we agreed that the current payment systems are toxic, a key cause of many of the problems confronting US health care. And we believed that pay for performance could be seen as a path toward more fundamental reform. We called, however, for care in implementation: comprehensive performance measures (including quality, costs, and patients' experiences), a move toward shared accountability among all responsible providers, and rigorous ongoing evaluation [23Institute of MedicineRewarding provider performance: aligning incentives in Medicare. National Academy of Sciences, Washington, DC2006Google Scholar]. But this is more easily said than done. So I will conclude with a few thoughts about how we might move forward, based largely on my understanding of the underlying causes of the rising costs and poor quality and the paradox of plenty (Figure 4). Because we fail to recognize the key role of the local system (capacity and culture), we should foster the development of local organizations that can be held accountable for care. To help the public understand that more isn't always better, we should ensure that all patients receive balanced information on the risks and benefits of procedures and the performance of the delivery systems at which they receive care. And we need to reform the payment system. Let me say a few words about each of these strategies. When I presented a number of these ideas to the Medicare Payment Advisory Commission in December 2006, Chair Glenn Hackbarth and I came up with a term for what we believe was needed: accountable care organizations[24Fisher E.S. Staiger D.O. Bynum J.P. Gottlieb D.J. Creating accountable care organizations: the extended hospital medical staff.Health Aff (Millwood). 2007; 26: w44-w57Crossref PubMed Scopus (278) Google Scholar]. Such organizations would be capable of managing the full continuum of patient care as either real or virtual integrated local delivery systems, of sufficient size to support comprehensive performance measurement, and capable of planning budgets and resource needs. A number of current organizational forms could meet this need: large multispecialty group practices (the Mayo Clinic, Virginia Mason Hospital and Medical Center), physician-hospital organizations (Middlesex Health System), hospitals that own their physician groups (Intermountain Health Care, many rural hospitals), and what we refer to as the “extended hospital medical staff.” The latter are the “virtual” multispecialty groups affiliated with hospitals. Our analyses showed that most physicians practice with either direct or indirect affiliations with a single predominant hospital. And most of their patients receive the vast majority of their care from these networks of physicians [24Fisher E.S. Staiger D.O. Bynum J.P. Gottlieb D.J. Creating accountable care organizations: the extended hospital medical staff.Health Aff (Millwood). 2007; 26: w44-w57Crossref PubMed Scopus (278) Google Scholar]. There are a number of advantages to focusing performance measurement at the level of large medical groups or the extended hospital medical staff. It is more tractable, because it can include all physicians within the frame of measurement (all those who contribute to care) and is much more practical (many fewer entities from whom to collect data). The scope of measurement could be much broader, including all aspects of care relevant to patients: technical quality, the adequacy of informed patient choice, longitudinal costs, and quality. And measurement could include both traditional structural measures (such as the use of electronic records) and needed dimensions, such as transparency on leadership and physician financial incentives and potential conflicts of interest. A focus on accountable care organizations would also establish a viable locus of accountability for decisions about capacity. This brings me to the challenge of payment reform. We must recognize that the barriers to comprehensive reform, at least in the short term, are formidable. The public is concerned about capitation; providers are concerned about bearing risk. And new prospective payment systems based on bundles of services and “paying for value” are probably years away. In the meantime, I believe that we should seriously consider an approach referred to as “shared savings.” The key notion is to establish a target rate of spending growth (perhaps based on local or national “control” groups) and reward those physician groups that achieve per beneficiary growth in spending below the target (and high levels of quality) with a portion of the savings. The theory is currently being tested in the Centers for Medicare and Medicaid Services Physician Group Practice Demonstration program, with early results expected to be available this summer. The potential of this approach is suggested by preliminary data we provided to the Medicare Payment Advisory Commission. We divided the extended hospital medical staffs associated with each US hospital into 5 groups according to relative growth rates (with an equal number of Medicare beneficiaries in each group). Some groups had average annual growth in physician spending of almost 10%; but almost 40% of patients were cared for by groups with growth rates of under 5% per year. If all groups could achieve such growth rates, the crisis in Medicare spending would be delayed, and perhaps averted. But is there any reason for hope? Although I've recently learned to distinguish hope from optimism, I see important glimmers. The Physician Charter on Medical Professionalism, endorsed by 90 organizations, including the ACR, calls for a reinvigorated professionalism: our contract with society, underscoring the importance of placing the interests of patients above those of the physician. The charter calls for 10 commitments (Figure 5). I believe that these could serve well both for individual physicians, and as a framework for public reporting at the organizational level. The ACR's statement on pay for performance is aligned with these important values:Down the road, we hope that all providers involved in treating the same patient can share in any bonus for improved care efficiency and outcomes. The ultimate goal of [pay for performance] is to unify providers around what is best for the patient, eliminating the lack of coordination and segmentation so commonplace today and allowing quality to take center stage. So I will conclude by summarizing what I'd like to know: how to shift the focus of the health care system from simply “delivering care” to improving health and reducing suffering. I hope we can all work together toward that goal. Thank you." @default.
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• W2100038971 title "2007 Robert and Alma Moreton Lecture: Pay for Performance: More Than Rearranging the Deck Chairs?" @default.
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