Letters to the Editor: CEO's contract can reveal a hospital's true mission

We believe that if you want to understand what a hospital's primary mission truly is—financial performance or quality patient care—you should skip the mission statement and go directly to the CEO's contract. While these two goals aren't mutually exclusive, whatever the board really wants the hospital to achieve will be expressed as a significant incentive clause in the top executive's employment agreement. And, even more importantly, only when it makes it into the CEO's contract will it cascade into the performance goals of all those in the organization who are charged with turning those goals into reality.

That is why we were pleased to read Melanie Evans' recent cover story (“Bonuses still tied to better financials”) highlighting the increasing use of incentives to achieve quality targets in executive compensation. The alignment of incentives with organizational quality benchmarks is critical for success. It can only be a good thing for patients if everyone in the hospital, from the C-suite on down to front-line workers and physicians, understand all the quality imperatives embedded in Medicare reimbursement policies and, increasingly, those of private insurers.

We were especially encouraged by the quote from Herb Vallier, chief human resources officer at Ascension Health: “Finance would not be weighted any more than quality” when calculating executive bonuses. The most significant remaining hurdle to high performance is that hospital management and physicians do not yet have a working knowledge of the complex quality benchmarks that affect reimbursement. If hospital leaders want to sustain operating margins during this period of decreasing demand for inpatient services, they need an engaged organization that understands the quality benchmarks and how they link to higher payer reimbursement.

Our research shows that in many hospitals, 2% to 6% of net income is at risk with value-based reimbursement. Therefore, a focus on quality in executive compensation is necessary but not sufficient for success. Executives will also need to create some form of quality-based compensation program for employees and have a clinical staff with a strong working knowledge about the quality-linked reimbursement programs.

Raymond Paul Tew,

Steven L. Owen and J. Duncan Mooreco-authors of Value-Based Medicare Reimbursement for Hospitals and PhysiciansAtlanta

The April 14 editorial (“A promising start”) says fears that payment data would be misinterpreted have proved unfounded. Later, in the same editorial, you provided ample evidence that the fear was justified by concluding that physicians opt for Lucentis over Avastin for treatment of macular degeneration because it's more profitable.

We have a legal and ethical responsibility to give patients informed choices for treatments. Our retina surgeon uses both drugs and asks patients which drug they prefer. It's no surprise that most pick Lucentis, since Avastin is not approved by the Food and Drug Administration for macular degeneration and comes from poorly regulated compounding pharmacies.

And just in case some still think profit is the motive, here are the numbers at our practice: Medicare allows $1,985.98 for a standard injection. Genentech, which makes Lucentis, charges $1,950. That's a 1.8% margin. But Medicare pays only 80%, and with the sequestration, it reduces the Medicare payment by $31.78. Most of our patients have secondary insurance that considers the Medicare reduction a reduction in the allowance. So, the secondary insurance makes the allowable $1,954.20, giving us a profit of $4.20, or about two-tenths of 1%. Bad debt from those who don't have supplemental insurance eats up most of that profit. At this time, we have $14,000 in Lucentis accounts receivable that are over 5 months old. That's all the profit from 3,333 Lucentis injections.

We're all for transparency when it serves a useful purpose. But the data release served no useful purpose, except perhaps to divert attention from government incompetency by placing blame on those who devote their lives to saving people's sight.

Dan Craig

CEO, Eye Surgeons AssociatesBettendorf, Iowa

It was with great interest that I read the article titled “Proton beam centers sprout despite evidence drought”. The article hit the nail on the head as far as proton therapy is concerned. These centers have been sprouting up despite a paucity of evidence in their benefit. The article correctly states that there may be a benefit for certain tumors such as those found in the pediatric population, but that for other diseases, such as prostate cancer, the data for protons are unclear at best. A peer-reviewed article published in JAMA from Chen et al. in 2012 showed increased gastrointestinal side effects with protons compared to other less costly forms of treatment for prostate cancer.

As chief of radiation oncology at Winthrop-University Hospital, I take great pride in helping to grow the Integrative Men's Health Program with Dr. Aaron Katz, chairman of urology at Winthrop, who has been a pioneer in a holistic approach to prostate cancer treatment. One of the tenets of our program is to tailor treatment to each specific patient's needs—for some, that means undergoing treatment immediately, but for others, it may mean active surveillance. For those patients who are candidates for radiation, rather than invest in an overpriced proton unit, we use a CyberKnife stereotactic system, which has the advantage of treating patients in five days rather than 45 to allow them to return to their normal daily activities much more quickly.

Dr. Jonathan A. Haas

Chief, division of radiation oncologyWinthrop-University HospitalMineola, N.Y.