DFP's Barb Arrigo: The perverse incentives of health care

[Bozita]

http://freep.com/article/20091109/BLOG2501/91109040/1322/The-perverse-incentives-of-health-care

POSTED NOVEMBER 9, 2009 - 12:55 P.M.
The perverse incentives of health care


The New York Times magazine has a fascinating report on work done in a Utah hospital system to standardize some of its procedures based on its own experience about what led to better outcomes. (It refers, as do most stories along this line, to Michigan hospitals’ success in tamping down intensive care infection rates related to IV insertions by using a similar tactic.)


But here’s the paragraph that really epitomizes how screwed up our health care system is now:

When Intermountain standardized lung care for premature babies, it not only cut the number who went on a ventilator by more than 75 percent; it also reduced costs by hundreds of thousands of dollars a year. Perversely, Intermountain’s revenues were reduced by even more. Altogether, Intermountain lost $329,000. Thanks to the fee-for-service system, the hospital had been making money off substandard care. And by improving care — by reducing the number of babies on ventilators — it lost money. As James tartly said, “We got screwed pretty badly on that.” The story is not all that unusual at Intermountain, either. That is why a hospital cannot do as Toyota did and squeeze its rivals by offering better, less-expensive care.


When the financial incentives are so badly aligned with the preferred outcome – better health – is it any wonder that no one can agree how to a) improve health care and b) ensure that everyone has access to it?

[The Magistrate]

1. An Excellent Point, Sir, Which Is Often Missed

Profit is the problem with costs....

[TygrBright]

2. Give the Mag another cigar for his well-filled humidor.

The issue of provider incentives/profit/costs has barely been whispered in this whole foofooraw.

The current system is NOT based on delivering maximum positive outcomes. It is based on delivering maximum profits to the big players at the top of the chain. And the poor schmucks much further down on the chain are barely scraping by.

And the "patient" has about the same status as the marks at a carnie.

ironically,
Bright

[The Magistrate]

3. Much Appreciated, Ma'am