For example, Medicare today pays hospitals a fee for each service they perform, regardless of whether it helps a patient. This means that a hospital that prevents an infection gets paid less than one that allows a patient to develop an infection during his or her hospitalization.
That's right—a great hospital that uses the most effective treatments can end up earning less than a hospital with sloppy practices that lead to avoidable infections. Moreover, private insurers have sometimes been stymied in efforts to alter these incentives.
That's exactly the kind of backward incentive that worsens health problems, drives up prices and leaves patients dissatisfied. In any other business, it would be absurd to pay the worst performers more and the best performers less, but that's exactly what we do in healthcare.
Fortunately, the private sector is now developing new and effective ways to overcome these upside-down incentives—and we're already delivering better results.
In Hawaii, the local Blue Cross and Blue Shield plan is partnering with hospitals and Premier on an initiative that ties reimbursement directly to cost and quality outcomes. As part of this program, hospitals are challenged to eliminate avoidable deaths, prevent readmissions and reduce hospital costs. In addition, hospitals must provide all recommended treatments, prevent infections and injuries, and ensure a positive experience.
Hospitals that meet the goals are eligible for bonuses. Those that don't risk a 15% payment penalty. No more payment for bad outcomes.
Other collaborations among medical professionals and insurers are exploring new ways of delivering the best possible care to the customers—and patients—that we share. In New Jersey, Horizon Blue Cross and Blue Shield and health system AtlantiCare are working to change the typical us-vs.-them dynamic between providers and insurers by sharing goals, risks and investments in care improvements. After all, it's best for everyone when people are healthier.