NCPA - National Center for Policy Analysis


February 1, 2008

Could tying even tiny amounts of hospitals' reimbursement to clinical performance save 70,000 lives and $4.5 billion a year?  That's today's bold projection from Premier Inc., a hospital group that has been running Medicare's pay-for-performance pilot project.  The idea is that you can improve care and cut costs by giving hospitals even modest financial incentives to hit clinical targets, such as giving all heart-attack patients an aspirin on arrival.

Last year, two studies knocked some dents into the concept:

  • One of those, in the New England Journal of Medicine a year ago, showed only modestly better scores at hospitals in Premier's project than elsewhere once researchers adjusted for factors like a hospital's size and patient volume.
  • The other, by Duke researchers in JAMA, found no significant incremental improvement over other hospitals in heart-attack care.

Premier says the analysis it's releasing today shows great results:

  • At participating hospitals, median patient cost per stay fell $1,000 and mortality rates fell by 1.87 percent.
  • On a basket of 19 protocols common to the pilot project and Medicare's national Hospital Compare database, Premier says its hospitals scored 6.5 percent better; its national projection assumes all hospitals showed similar improvements.

The Premier analysis may not change many minds.  For one thing, pay-for-performance researchers say it lacks the kind of rigor that last year's studies had, despite covering more time and patients.  But Evan Benjamin, chief quality officer at Baystate Health in Springfield, Mass., and co-author of the NEJM study, says the broad outlines of Premier's findings ring true.  "Hospitals do respond to these incentives," he says.  Still unclear is whether bigger incentives or a focus on less familiar treatment goals will have a stronger effect.

Source: Theo Francis, "Small Incentives to Hospitals Could Pay Big Quality Dividends," Wall Street Journal, January 31, 2008.

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