Reform Update: JAMA study suggests money alone may not be enough to improve performance, reduce costs

One goal of health reform, among many, is to break the industry's dependence on incentives for hospitals and doctors to do a high volume of business. Incentives for volume invite wasteful spending, of course, and also can be harmful if patients receive unnecessary care as a result.

The Patient Protection and Affordable Care Act is testing new incentives that attempt to reward hospitals and doctors for controlling costs without compromising quality. But getting them right is tricky, and that challenge is on display in new research published in Journal of the American Medical Association.

The study, which included a dozen Veterans Affairs primary-care clinics, sought to identify whether financial incentives were more successful if they reward individual physicians, their practices or both.

The incentives (for blood pressure control quality measures) turned out to be of little consequence, and only payments made directly to doctors made a real difference, the study found.

Payments made to groups (on average $1,648 during the study period) and the combined group-individual incentives (on average, $4,270) were not associated with a significant change in performance. Individual incentives ($2,672 on average) did yield a significant change, but one that did not last after incentives ended.

In the end, money may not be enough, wrote Dr. Laura Petersen, a professor at the Baylor College of Medicine and center director for the Houston VA Health Services and Development Center of Excellence, and her co-authors.

“Payment-system interventions are attractive because of their potential scale and reach,” they wrote. “However, payment-system interventions are only one piece of the solution to improve management of chronic diseases such as hypertension. More resource-intensive, tailored, patient-level self-management strategies may be needed to truly affect patient outcomes.”

The Agency for Healthcare Research and Quality reports that 1% of the population accounts for one-fifth of the nation's civilian, non-institutional spending on healthcare. The average cost of care for patients in this pricey and tiny tier was $87,500 for 2010, AHRQ said. Meanwhile, the average cost in 2010 for patients with at least four chronic conditions was nearly $81,800.

Health economist Martin Gaynor has been named as director of the Federal Trade Commission's Bureau of Economics, a division that won praise from the commission chairwoman as responsible for reinvigorating hospital antitrust enforcement, as Modern Healthcare's Joe Carlson reported.

Gaynor, who will go on leave from Carnegie Mellon University where he teaches economics and public policy, starts his new job Oct. 1. He is an active presence in health policy research and debate as board chairman of the Health Care Cost Institute, a research repository of commercial insurance data, and with an active presence on Twitter. (He will likely curtail his tweets during his stint at the FTC, he said in less than 140 characters.)

Gaynor also regularly blogs on health policy. In light of his appointment, here's an excerpt from an August post at the blog “Compassionate Economics” on his proposals to achieve an efficient, accessible and affordable healthcare system:

“Lack of competition leads to poor service, poor quality and high prices, and impedes innovation (especially organizational innovation),” he wrote, by way of introducing proposals to bolster competition across the industry.

His first suggestion: Strongly enforce antitrust laws.

“There has been a great deal of consolidation in healthcare markets in recent years, especially in hospital and insurance markets, but also in physician markets and between the different kinds of market participants (e.g., insurers-hospitals, hospitals-physicians, etc.),” he wrote. “Consolidation has resulted if few, if any documented benefits, and has harmed competition and led to increased prices, reduced quality, and impeded the emergence of new, innovative forms of healthcare delivery. Antitrust enforcement can help solve problems in specific markets. It can also have a deterrent effect on those considering anti-competitive actions.”

Follow Melanie Evans on Twitter: @MHmevans