Mixing money, morals for better health

by Craig Westover

Free-market libertarians like moi have an instinctive and visceral aversion to the trendy “pay for performance” schemes being concocted in big-business boardrooms and big-government cloakrooms as remedies for “the health care crisis.” But before one can preach abstinence, one must understand the temptation posed by pay for performance.

Pay for performance means additionally compensating doctors for meeting certain cost and/or quality standards set by insurance companies, health systems and/or the government. In reality, pay for performance means whatever opponents and proponents want it to mean, which makes it a difficult topic to wrap one’s arms about.

On Nov. 16 at United Hospital in St. Paul, university professor, practicing family physician and bioethicist Dr. David Satin will grapple with “Ethical Issues in Pay for Performance.” I had breakfast with Satin last week, and despite his trimming the fat from his bacon (the tasty part) and quoting Noam Chomsky, he had a lot of intelligent things to say about pay for performance. Satin’s talk promises to challenge supporters and opponents of pay for performance and confront cost and quality in health care from a logical rather than a visceral perspective.

On the benefit side, there are good data to support the concept that if you change physician compensation, doctors change their behavior. And there are data that indicate that if you change patient behavior, you can get better health outcomes – not always, but enough times that there are individual health and collective economic benefits.

And not all patients receive the “best” care. According to an Institute for Medicine study, there is a significant gap between the treatment patients “ought” to receive and what they get – although in many cases departure from recommended care can be justified. Pay for performance provides an enforcement mechanism to move physicians to newer, often more effective medical treatments.

What’s wrong with that?

Those of us suspicious of aggregate data applied to individual cases, especially to individual health care decisions, can answer that one. A doctor should focus on the individual’s well-being, not on his personal bottom line. There are cost and privacy issues in centralized collection and storage of patient data. We see the danger an arbitrary economic incentive introduces into the doctor-patient relationship.

If my family doctor gets a Medicare bonus based on how he treats me, should I trust him any more or less than a doctor prescribing a drug manufactured by a firm that pays him a consulting fee?

The debate over pay for performance boils down to this: Who decides, and how do they decide, what constitutes quality performance and reasonable cost?

Medical experts are going to be influenced by biases and self-interest when concocting pay-for-performance plans. On the other hand, the “market” is not a moral entity in the way people commonly think about the morality of providing health care for the sick.

Between those two positions, there appears to be as well-defined a border as between Canada and the United States.

Must we choose either:

— a “meritocracy” system where you receive the level of health care you have earned – with available but disproportionately distributed access favoring rich over poor, urban over rural and the young and healthy over the old and sick?

— or a dystopia where the government minimizes costs by defining what treatments are allowed at what cost, locking physicians into the impossible situation of providing first world medicine on third world resources?

Ironically, the consequences of the latter (Canadian-style) system are doctors dropping out of the government system to start “boutique clinics,” which serve the rich over the poor, the urban over the rural, the young and healthy over the old and sick.

That dichotomy is both unacceptable and unnecessary.

Among the many incarnations of pay for performance, Satin discusses a grant approach that makes intriguing market sense because it aligns the moral and social incentives of doctors to provide good individual care with economic incentive to do so. Most pay-for-performance models drive a wedge between economic reward and the more selfless reasons people go into medicine. The grant approach keeps those incentives aligned; providers evaluate their own practices to determine where and how they might get better health outcomes and reduce costs. Up-front grant money enables them to practice the preventative care that results in long-term savings and better patient health.

So when it comes to pay-for-performance schemes, perhaps abstinence is not the only solution, but practicing safe policymaking requires an understanding of underlying issues – not uninhibited expansion of bureaucracy.

Craig Westover is a contributing columnist to the Pioneer Press Opinion page and a senior policy fellow at the Minnesota Free Market Institute. His e-mail address is westover4@yahoo.com This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

This commentary originally appeared in the St. Paul Pioneer Press Nov 7. 2007.