• Will Obamacare’s hospital payment cuts harm quality?

    A quick response to Sarah Kliff’s post of a few days ago (go read it to catch up):

    Though it is true that the ACA would cut payments to hospitals in one large crude way (the productivity updates — see chart here), it also has other incentives (PDF) for hospital quality that were not in place when the program initiated prior hospital payment cuts. Among those is the encouragement of the formation of ACOs, which tie bonuses to quality measures.

    I’m not in favor of the meat ax approach embedded in the productivity updates. They run counter to my multi-production function view of the system. But one thing they might do is further encourage ACO formation. To the extent that ACOs can improve quality, we should not expect the same results as found by Wu and Shen, as reported by Kliff (and me!!!).

    Now, ACOs have limitations, about which I’ve blogged considerably and express again in a forthcoming publication. I’m not terribly optimistic they will address the system-wide health care quality and cost problems, even if they prove to be a useful tool for Medicare cost control. All I’m saying is there are some reasons to be cautious about extrapolating the findings of Wu and Shen. This isn’t 1997.


    • I think that when there are cuts to reimbursements that quality of care ultimately does suffer. However, when society cannot afford the current level of spending on healthcare then decisions have to be made on how to best allocate resources and to create incentives to improve quality.

    • People throw around the word “quality” as if we all agree on what it means, and that it invariably means something good for patients. Most patients hear the word quality and they think it means what the cognescenti would call “outcomes.” They have no idea that quality in health care research has a very specific meaning, that it is mostly a measure of process not outcome, and a lot of the time it has little or no connection to what patients want or need — or what will actually benefit them. Much of the time quality is what we can measure, like rates of pneumonia vaccination, and what we can measure is not the same thing as what will benefit the patient the most.

      So when people say that “quality” will be be hurt if payments are cut, often it’s more of a threat than a statement of fact. Or it is an admission that health care providers are willing to act against their patients’ best interests rather than figure out how to do better with less money. It means, for example, that a hospital is willing to cut nursing staff rather than figure out how to provide care more efficiently (and there is lots of room for greater productive efficiency in health care. Just ask any hospital (Virgina Mason in Seattle and ThedaCare in Appleton, Wisc come to mind) that has made the effort to improve efficiency).

      I would like to see a more robust discussion of quality, a discussion that includes such measures as the rate at which frail and elderly patients are given the opportunity to have a real conversation about the kind of care they prefer in the last months and weeks of their lives. I’d like to see a quality measure that makes sure that patients facing elective surgery and screening tests were fully informed about the tradeoffs involved. How many hospitals have a robust shared decision making program in place? I know of one that has some shared decision making, and a few others than have small pilot programs. Anybody who knows of more should comment. How about a quality measure that looks at a hospital’s effort to actually improve the health of it’s community — that sets up community based primary care clinics? That organizes walking groups? Hospitals that are doing this should be held up as shining examples.