Michael Cannon over at Cato takes issue with my conclusions regarding pay-for-performance — the federal and third-party steamroller which is the health care bureaucracy’s latest ill-considered idea for reigning in health care costs. In pay-for performance, guidelines for quality (read: less expensive) care are established, and those physicians who color between the lines get paid more (or, more likely, don’t get paid less).

Dr. Bob argues:

1. “High quality — while not invariably more expensive — is often so.”
2. “[B]y and large,” the guidelines that physicians are supposed to follow “don’t exist — except in a few relatively straightforward areas of medicine.”

I agree with those statements, but I disagree with their conclusions.

Though the first statement is true, it is also true that a lot of the expensive stuff that doctors deliver is not high quality. For 30 years, researchers at Dartmouth Medical School have found it very easy to demonstrate that some doctors do a lot more expensive stuff than other doctors do (e.g., specialist consultations, hospital stays, etc.). But they have found it very, very hard to find any evidence that that extra stuff makes patients any healthier or happier. Thus, a lot of the expensive stuff that doctors do isn’t high-quality care.

Though the second statement is true, it is also true that where evidence-based guidelines do exist, patients still don’t get the “high-quality” care that the guidelines recommend. According to Elizabeth McGlynn and her colleagues, patients receive such recommended care only about 55 percent of the time. (I put “high-quality” in quotes because not every patient should receive what the experts recommend. But it would be a stretch to say that 45 percent of patients are outliers.) Even when evidence-based guidelines exist, doctors don’t follow them.

Quality suffers both because physicians don’t do enough of what they should, and do too much of what they shouldn’t.

Michael makes some good points here, but is looking at the forest while missing some very big trees.

There is little question that a substantial amount of medical care, much of which is very high-cost, is performed with little measurable benefit. I would emphasize here the word “measurable.” For example, a patient who comes in with blood in the stool will generally be advised to have a colonoscopy, which is an expensive procedure. In many cases, the colonoscopy will be normal, and therefore, in retrospect, be unnecessary. The patient, however, will receive the reassurance that he or she does not have cancer, and more appropriate treatment for the bleeding problem will result. This is an important outcome, but difficult to measure in purely economic terms.

Furthermore, in those cases where cancer is detected, this finding will lead to much more care, which is often quite expensive. This situation points out another flaw in our current enchantment with the cost savings of preventive medicine — particularly by those who believe it will somehow magically save us millions of dollars to spend on the uninsured. The economics of most screening programs make little sense, for the screening generates a large number of expensive follow-up tests, and in many cases the initial symptom or abnormality proves to be a false positive.

The second issue about ordering expensive studies speaks to another favorite solution of the cost-cutters: primary care. The knowledgebase of medicine has grown exponentially in the past 50 years, with increasing numbers of specialties being spawned to master it. The specialist, dedicated to a single subset of medical knowledge, must still spend substantial effort to remain current in his or her field of specialization. The primary care provider, however, must attempt to master, at least to some degree, a substantial amount of the knowledge in multiple specialties in order to make wise decisions about evaluation and treatment in his or her patients.

In my experience, it is the primary care physician who often orders expensive studies inappropriately. I have seen patients who have come to me, having had an MRI (costing well over $1000) to diagnose a scrotal hydrocele — a benign condition which is almost always harmless, and should be easily diagnosable by physical examination, or much less expensive ultrasound. The point here is not to denigrate the primary care physician, but simply to point out that it is becoming virtually impossible for the primary care provider to achieve mastery of the many complex subspecialties of medicine. Education can of course resolve some of these problems, but this is likely to grow worse as medicine becomes increasingly more complex. The primary care provider is under substantial pressure to keep patients away from expensive specialists– which can prove to be a false economy in many instances.

The last tree in the forest is a giant Sequoia, which is our current liability system. It is very difficult to estimate how many of the expensive, unnecessary studies are driven by our current malpractice system — but it is unquestionably huge. In a perfect world, we would weigh the risks and benefits of diagnostic studies, and order expensive studies or treatments only where the benefits substantially outweigh the risks. In the real world, every physician mentally plays out the scenario of failing to do an expensive but low-yield study, and having to answer for this decision — entirely rational at the time — under the cynical cross-examination of a plaintiffs attorney in a courtroom. Measuring this impact is extremely difficult, and its effect is minimized in the extreme by the trial attorneys, but it is in fact a huge financial black hole in our health care system. Unfortunately, tort reform alone will not solve this.

The institution of rigid pay for performance guidelines will also introduce new legal opportunities for second-guessing sound medical decision-making. There will certainly be instances — the percentage of which will depend on the quality of the guidelines — where physicians will need to make recommendations which fall outside of these guidelines, in order to provide high-quality care. Such decisions will provide rich fodder for Monday morning quarterbacking by attorneys. Furthermore, anyone who believes that such guidelines, studiously followed, will provide protection against malpractice, should stop smoking that funny tobacco and to seek treatment immediately.

I think third-party P4P, where insurers reward providers for high-quality care, is a fine idea – provided the patient gets to choose her insurer.

This last point which Michael makes regarding third-party payers instituting quality guidelines needs a reality check. The simple fact in every physician’s experience is that insurance companies have no interest whatsoever in quality care, except as a marketing tool. For third-party payers, quality = low-cost. Our local Blue Cross provider recently sent out letters to patients, indicating that a number of physicians in their panel had been dropped from one of their large plans because they did not meet “quality standards.” Turns out, the only standards applied were financial and not medical, and physicians had no knowledge of or access to the so-called standards. The carrier has as a result found themselves in court defending a class action suit for defamation of character. Expect to see much more of these sort of shenanigans as pay for performance becomes more common.

The best way to assure quality in healthcare is a high level of transparency in our medical system — something which is currently impossible due to the current liability environment — combined with placing the decision-making process regarding care back in the hands the patients, by making the patient the purchaser of healthcare rather than government or the insurance carriers.