Saturday, August 05, 2006


A Cato press release:

In response to growing concern over the quality of medical care in the U.S., Medicare is experimenting with "pay-for-performance" (P4P), a financial incentive that rewards health care providers for recommended care. A new Cato Institute working paper to be published in the Yale Journal of Health Policy Law & Ethics, however, finds that P4P is an unproven tool for improving quality and carries significant potential for harm.

In the study "Pay-for-Performance: Is Medicare a Good Candidate?" Michael Cannon, director of health policy studies at the Cato Institute, warns policymakers to take a cautious approach to P4P, especially when applying it to Medicare: "Given Medicare's patient population, size, and sensitivity to interest group lobbying, any harm that could result from a P4P scheme would be more likely to occur within traditional Medicare than elsewhere in the health care system." Cannon explains that the high incidence of chronic illness among Medicare beneficiaries "increases the likelihood that a P4P scheme would create incentives to mistreat such patients and turn them into `medical hot potatoes' that providers make an effort to avoid."

Furthermore, Medicare is a creature of the political process. This, the study asserts, not only increases the potential for error at each stage of designing, implementing, and maintaining a P4P scheme, but guarantees congressional and administrative lobbying by providers who seek to protect their own interests in shaping a P4P initiative.

According to Cannon, Congress can harness the potential of provider-focused P4P incentives while reducing the likelihood of harm by confining P4P to private Medicare Advantage plans and by encouraging greater participation in those plans.

In addition, P4P financial incentives can be targeted to patients as well as providers to allow greater transparency. "A weakness of provider-focused financial incentives," Cannon explains, "is that it can affect the quality of care, or even a patient's access to care, without the patients' knowledge. In contrast, patient-focused financial incentives would engage patients in the pursuit of quality, while allowing them to deviate from `best practices' if doing so fits their needs."


An NHS hospital has been penalised for treating people too quickly after its local trusts refused to pay the 2.5m pound cost of clearing a backlog of patients. Ipswich Hospital had been so successful in reducing its waiting lists that it was able to meet current demand for treatment almost immediately. However, the acceleration of treatment breached rules set by the Suffolk East Primary Care Trusts (PCTs), which stated that patients must wait at least 122 days, to ensure that its own resources were not exhausted too quickly.

The Government has set tough national targets in an attempt to get hospitals to cut long waiting lists, and the Department of Health rules state that no patient should wait for more than six months for an operation.

However, hospital staff are outraged that strict adherence to budget targets means that they are being effectively penalised for putting patients first.

A union leader said: "The PCTs have been very unreasonable. They wanted the work done, we did it, and now they should pay for it. If a hospital performs the operation before the 122 days are up, primary care trusts [who pay the hospital to provide operations] are within their rights not to stump up the cash."

A report by external auditors into Ipswich Hospital's 16.7m pound debt crisis found that the trust had lost 2.4m pounds because it performed operations that the PCT would not pay it for. It states: "The trust had spare capacity and, therefore, to ensure its resources were utilised, treated a number of patients in advance of the 122-day rule." The report shows that in 2004-05 the early treatments cost the hospital 240,000 pounds. In 2005-06 the figure increased to 2.4 million pounds. The 122-day guideline was introduced by the three Suffolk East PCTs and is believed to be used by other PCTs in the country, but it is not Government policy.

Jan Rowsell, a spokeswoman for Ipswich Hospital, said: "Anyone who is deemed to be clinically urgent would be seen earlier. This rule is there for people who are waiting for planned surgery." She admitted that the hospital had effectively breached its agreement with the Suffolk East PCTs by treating people more quickly, although she added that the reasons why it had done so were understandable.

Carole Taylor-Brown, chief executive of the Suffolk East PCTs, said: "The whole principle of it is to make sure that patients are seen in turn as they go through the system and to level out waiting times. "It is also about making best use of the money that we have available throughout the year. It would be great if we were fully resourced to do everything. But we are given a certain amount for the year and it's about making sure that were using it efficiently.

More here


For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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