The Challenge of Paying Hospitals Based on "Performance"

The Wall Street Journal has recently been making a considerable effort to shine a light on the challenges facing hospitals these days.  This story from a few weeks back caused a considerable amount of shock.  This weekend, they ran a story on Medicare moving to pay hospitals based on performance indicators, one of which is patient satisfaction.

Roper Hospital in Charleston, S.C., scored above the national base line in every survey category and expects to earn an extra $87,000 in Medicare pay over the next year. The hospital tied managers’ compensation to Roper’s satisfaction-survey scores, and told room cleaners to ask patients whether they missed any spots. “They’re not absurd questions,” hospital CEO Matt Severance says of the survey. “They’re very relevant to what we would want as a patient.”

There is an important challenge inherent in paying hospitals this way highlights the difference in perspectives from a payer and a provider.

First, patients don’t always know what is good care and what isn’t.  And, paying providers because they have clean rooms doesn’t seem to provide a good correlation to the quality of care provided.  Case in point:

Donna Barnett, a senior nurse at Grady, cites a patient who had a hemorrhagic stroke and recovered swiftly enough to walk out of the hospital about a week later. On the survey the patient complained that meals were served cold and gave Grady low scores. “It makes you want to throw your hands up,” said Ms. Barnett.

That said, shouldn’t every hospital be able to provide clean rooms?  I would certainly think there would be a direct correlation between cleaner rooms and lower overall infection rates.  The problem is, again, patients aren’t always the best judges on what is or isn’t clean, particularly given their state of mind while in a hospital.

“We have some of the best infection-control outcomes in the state here, but if you looked at the equipment and furniture, it maybe is not as shiny and new as in a suburban hospital,” said Kevin Slavin, president and CEO of East Orange General Hospital in New Jersey. In its first batch of survey scores, around half of patients gave the hospital an overall favorable rating. Mr. Slavin estimates the facility will lose $240,000 this coming year as a result of low satisfaction scores.

What does paying providers based on patient satisfaction scores tell us about the message we’re sending to providers?  Well, let’s think about that for a minute.

1.  Spend money on flat screen TVs.  It increases your satisfaction scores.

2.  Provide a daily newspaper.  Patients like that.

3.  Upgrade the menu.  Who doesn’t like Copper River Salmon?

You would be accurate to sense a bit of cynicism from me here.  Why?  All three of these things will increase patient satisfaction scores.  None of them will improve care.  Moreover, they will all add costs – from materials to logistics.

If we want to improve quality and a reduced cost trendline, why confuse being able to watch ESPN with quality performance?

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