Some time ago I met with the CEO of a major network provider. The exchange went like this:
Author: “What makes you think that payers will ever agree to increased compensation—even for gold-standard quality metrics?”
CEO: “Because they said so.”
I envy his faith. However, the chilling possibility is that in the near future top-tier compensation will be set to match current levels, not exceed them. If that happens, falling short on performance metrics may mean collecting even less than you do now. Whatever your political persuasion, the president has a consistent message. He marries quality and performance metrics to public policy, clinical practice and reimbursement.
If you are paying attention to the national discourse, our future becomes clear: outcomes-based compensation will focus leadership on quality performance. In fact, the CMS has been talking about the notion of value-based purchasing for almost two years: on Nov. 27, 2007, in their report to Congress, industry leaders got their first glimpse of Medicare's value-based reimbursement model.
Almost exactly one year later, with the Medicare Hospital Quality Improvement Act of 2008, Congress jumped on board the healthcare value train. If Sens. Max Baucus (D-Mont.) and Chuck Grassley (R-Iowa) get their way, the current annual Medicare withhold—between 2% to 5% of your total inpatient payment from Medicare—may be tied directly to quality performance across measures such as process of care, clinical quality and patient response. And yes, the bill has bipartisan support. Just the kind of support needed to give Congress the statutory authority to keep funds from poorer performers and allot increased payments to quality trailblazers.
In short, quality is about to become a lot more important to a lot more important people. Quality people often talk about being frustrated by ambivalent commitments, limited resources and lip service. They may be in for a pleasant surprise.
However, their new status will be mitigated by intense scrutiny. New quality initiatives and their related payment schemes will tie quality to the bottom line. Performance metrics will become real-world methods of capturing and sustaining a potentially shrinking pool of revenue. If you are a chief financial officer, don't expect to remain hands-off for long. You will soon be e-mailing your chief quality officer with alarming frequency.
Competition based on quality may be intense. Some hospitals may be relative winners, and others beggared by insufficient compensation for care that costs the same to provide regardless of cholesterol levels or follow-up attendance statistics. Metrics in the red require planning and action now, or you risk falling behind your competitors in a system that will reward the strong and punish, or even eliminate, the weak.