Saturday, August 9, 2008

Been busy and P4P

Its been a long time since I posted. Much has been happening in healthcare, but frankly, family has been at the forefront of my life. My daughter plays fast-pitch travel softball, so know you know the rest of the story. Weekend tourney's, lots of practices and games. No national bids this year but it was a lot of fun. Try-outs last weekend for 12U, start again and she's playing fall ball. Left-hander, pitches and plays first base and outfield. Pretty good from Dad's point of view....

Now back to the issues....

P4P, Patient Satisfaction and my read on what you need to do Mr. Hospital CEO......

Attempts at payment system reform to stem rising healthcare costs by controlling access and utilization through various insurance programs and market based reforms- PPOs, HMOs, MSAs and HSAs to name a few, have meet with limited success. With projected healthcare spending to potentially exceed $4.1 trillion by 2016[1], Pay-for-Performance (P4P) represents a potential mechanism to reign in unsustainable healthcare spending growth.

Pay-for-Performance, commonly referred to as P4P, is a concept whereby hospitals, health systems, physicians and other medical providers are incentivized along agreed upon quality standards for specific procedures. In return, they receive increased reimbursement rates based on meeting defined quality standards of which patient satisfaction is one of the critical performance measures.

The short historical background of the P4P movement begins in[2]:

1991, the National Committee for Quality Assurance (NCQA) with the introduction of the Health Plan Employer Data and Information Set (HEDIS)
2001, the Institute of Medicine proposes that quality-based incentive payments to healthcare providers can improve quality
2002, the Center for Medicare and Medicaid Services (CMS) launches its pay-for-performance plan based on 10 quality measures, and in conjunction with the Agency for Healthcare Research and Quality (AHRQ), develops and introduces HCAHPS
2003, Medicare Prescription Drug, Improvement and Modernization Act of 2003, hospitals reporting quality data in 2004 receive enhanced payments in 2005
2003, CMS and Premier launch the Premier Hospital Quality Incentive Demonstration Project (HQID)
2004, employer-based groups entered the P4P debate with the concept of “Care-Focused Purchasing” using quality standards based on medical evidence
2005, the Joint Commission and the American Medical Association begin to more heavily weigh into the debate

Underlying all is the concept that patient satisfaction is a key value-based decision driver patients can use to make reasonable purchasing evaluations when seeking treatment, as well as positively affecting patient compliance and adherence. Organizations demonstrating the ability to consistently deliver high levels of satisfaction will improve their quality outcomes and be rewarded accordingly through higher reimbursements.

The Patient Satisfaction Imperative

Satisfied patients[3]:

Are more compliant with treatment regimens
Even if the medical outcome is not good, believes that he or she had a quality medical experience.
Recommend you to others
Return to you for care
Litigate less

Highly satisfied patients are a source of continued revenue, cost avoidance and positive community image. A culture of satisfaction is one of the major focuses of the institution. Lead by senior executives, satisfaction is measured, evaluated and defined as an organizational imperative[4]. In a P4P environment where a portion of the hospitals reimbursement is at risk by not achieving required quality standards, the institutionalization of patient satisfaction processes, measurements and departmental change capabilities targeting benchmark performance can result in additional revenue. This enhanced revenue possibility could potentially be the difference between growth, expansion and continued mission, or an uncertain future that hospital leadership has little ability to control.

Taking Advantage of Pay-for-Performance

Understand that P4P is a risk-taking proposition requiring dedicated resources, measurement capabilities and access to proven quality improvement techniques and systems. The hospital or health system that applies the following principles established through years of research and market success can take a step forward confidentially thriving in a P4P environment. Some of the key programmatic elements for a successful venture into P4P include:

Robust survey
Rigorous measurement and analysis
Willingness to focus on change
Access to current thought-leaders, case studies and white papers
Peer group comparisons and the ability to network
Gain-sharing with physicians, employees and vendors
Vendor risk sharing and support


Pay-for-Performance represents a significant opportunity in the age of data transparency to improve quality, reduce costs and improve outcomes. Leadership’s action supported by proven expertise can allow for the taking of calculated, defined risks necessary to capitalize on payments for achieving high levels of patient satisfaction. As consumer-directed health becomes more relevant and employers continue to shift the cost of care to employees, high levels of patient satisfaction will be one of the determinants of reimbursement, exclusive agreements, expansion and market share growth.

[1] John A. Poisal, Christopher Truffer, Shelia Smith, Andrea Sisko, Cathy Cowan, Sean Keehan, Bridget Dickensheets, The National Health Expenditures Account Team, “Health Care Spending Projections Through 2016: Modest Changes Obscure Part D’s Impact”, Health Affairs, March/April 2007, (26) 242-253.
[2] White Paper, Plexis Health Systems, Inc., “Pay for Performance: Improving Quality and Efficiency of Healthcare Delivery”, 2008, 1-4.
[3] Ralph Bell, PhD, Michael J, Krivich, CHE, “How to Use Patient Satisfaction Data to Improve Healthcare Quality”, ASQ, January 2000, 6 -7.
[4] Michael J. Krivich, FACHE, PCM, “Only Sixty-eight Percent Satisfied” Healthcare Matters Blog, April 2008,

© 2008, Michael J. Krivich, FACHE, PCM. All rights reserved.