Beware of hospitals touting 'value-based' care
By: Eric Bricker, MD
RAND and Harvard University researchers recently published a study in the Journal of the American Medical Association examining how doctors are paid by hospital system-owned practices.
The study found that only 9% of primary care physician compensation was based on value (i.e. quality and cost-effectiveness) and only 5.3% of specialist compensation was based on value.
The study concluded: “The results of this cross-sectional study suggest that PCPs and specialists despite receiving value-based reimbursement incentives from payers, the compensation of health system PCPs and specialists were dominated by volume-based incentives designed to maximize health systems revenue.”
Implications for Employer-Sponsored Health Plans
Beware of hospital systems that tout ‘value-based’ care to sound appealing to the media, regulators, or employers.
Doctors drive patient care and ordering at hospitals. If those doctors are paid fee-for-service, they will order more tests and procedures if it will save them time so they can see more patients. After all, in fee-for-service, the number of patients a doctor can see is the #1 driver of doctor compensation.
For example, rather than taking the time to perform a detailed history and physical on a patient with back or joint pain, it is ‘faster’ just to order an MRI. The MRI saves the doctor time and therefore, he or she can see more patients.
The MRI may cost $2,000. That is of no consequence to the doctor.
If ordering an MRI can save a doctor 10 minutes in not having to perform a detailed history and physical exam, they can see one more patient during those 10 minutes and bring in another $150 – $300 of revenue.
What an Employer Can Do
Do not pay attention to what organizations say—hospitals included. Rather, watch what they do.
How can an employer ‘watch’ what a hospital system does? They can analyze their claims data and learn from large claims datasets of other employers.
By looking at claims data, an employer can identify those doctors that take the time to perform detailed histories and physical exams and therefore, order fewer MRIs.
Employers can then structure their health insurance plan design to incentivize employees to see doctors who spend more time with patients via lower out-of-pocket cost copays.
This approach is not theoretical. Employers from Walmart to Serigraph already use this strategy.
It is also the strategy SimplePay Health uses with its customers.
Contact email@example.com to learn how.