The Problem with Pay-for-Performance (P4P)

New York Times journalist Dr. Aaron E Carroll does a nice job in his July 28, 2014 article describing the industry’s disappointment that a seemingly good idea (paying doctors more money for achieving a goal) yields disappointing results (improvements of 4-6% per metric, if at all, rather than 40-60%).  Let’s go deeper … let’s ask why P4P Quality payments in and of themselves fail to achieve the magnitude of improvement in healthcare outcomes our country needs.

#1 First, Determine the Underlying Problem(s) Causing Underperformance of the Clinical Care. Seldom is the problem a failure of physician motivation to do the right thing for the patient.  So adding more “motivation” (in the form of money) is unlikely to produce breakthrough improvements in outcomes between doctor and patient.  The doctor might focus more personal effort upon those clinical goals associated with monetary incentives, but likely at the expense of other equally important outcomes without incentives attached, achieving no net improvement for the practice. And as I’ve written before (What Role, Money”), autonomy, mastery and purpose are more effective than money at producing discretionary effort among physicians.

#2 Next, Formulate Solutions to those Problems. Discretionary effort is indeed an important component for creating improvement in healthcare outcomes, but other components more so.  The dominant reasons for disappointing rates of improvement have to do with lack of (1) systematic improvement infrastructure (systems of measurement, comparison, accountability to colleagues, process improvement), (2) culture of patient safety and team-based care, and (3) blending the promise of medical informatics to the complexities of healthcare delivery.

#3 Finally, Improvement Activities Should be Centrally Coordinated, but Peripherally Empowered.  A hundred points of simultaneous improvement, each using common methods and validated approaches, creates faster tempo of improvement across a healthcare system than a hierarchical top-down approach of control.

Some will undoubtedly assert that P4P’s disappointing results are due to providing inadequate levels of monetary rewards to physicians, but that point of view doesn’t jive with my observations and experiences, nor the research from Daniel Pink and others (see Dr. Carroll’s article for additional information).  We need to think beyond money (P4P) if we are to increase the tempo and magnitude of improvement in healthcare.

Spare Me the Subjective and Objective; I seek the Assessment and Plan

It’s easy to find a well-done study to affirm how anxious and unhappy we physicians are these days. For example, the October 2012 Merritt Hawkins / Physicians Foundation survey of nearly 14,000 physicians paints a picture of individual pessimism and professional decline (see table below).

The Physicians Foundation & Merritt Hawkins, October 2012


Pessimistic about the future of the profession


Morale described as “negative” for self


Morale described as “negative” for colleagues


Profession described as “in decline”


Willingness to Recommend Profession to Children / Young


It’s harder, and perhaps more meaningful, to interpret the subjective and objective. Indeed, I suggest we stop “interviewing for pain”, and start crafting an Assessment and Plan that might improve things. Lesser physicians spend the majority of their time transcribing data into the subjective and objective portion of their progress note; greater physicians spend that time interpreting the data and crafting a path toward recovery.

The root causes of our pain seem to be (1) reductions in our autonomy (for diagnosis and treatment; for running our practice; for regulatory and contractual reasons), and (2) issues related to money (decline in payment amount per unit of care, thus driving higher number of units; patients changing doctors for coverage/cost reasons; a belief that one must work more hours for the same pay). Interestingly, these root causes have been the industry’s intentional response to the ridiculously high cost of American healthcare, as well as inadequate and unreliable clinical outcomes of that care. We physicians failed to solve the problem of runaway costs over the last 30 years, so payors sought to solve it for us by reducing our decision-making autonomy and payments per unit of care. Those “interventions” failed of course, but that’s a different article.

Our Plan must account for the root causes of the disease:

  1. If we believe (a) unwarranted variation exists in the practice of medicine and surgery, (b) some unwarranted variation leads to wasted resources and lesser patient outcomes, and (c) Evidence-Based Medicine (EBM) can reduce some of that variation, then we physicians should collaborate to create, adopt and continuously refine Best Practices, rather than lament loss of individual physician autonomy.
  2. If we believe (a) earning a salary in the top 2% of American society is sufficient compensation for our years of personal sacrifices and professional pressures, (b) being invited into the lives of people when they are most vulnerable is a unique privilege, and (c) easing pain and suffering is meaningful work, then we should emphasize a personal perspective reflective of those blessings, rather than continuously mourning the massive changes in our practices.
  3. If we believe (a) fee-for-service (FFS) compensation promotes volume over value and can misalign patient and physician interests, (b) having administrative infrastructure frees physicians and surgeons to do more of what they like to do, and (c) practicing in a fellowship of collegiality and comradery leads to professional fulfillment, then we should form self-governing multi-specialty group practices, in which each physician is accountable to one another along dimensions of quality, citizenship, and work ethic.
The Plan

% of the solution

Create, adopt and continuously refine Best Practices, led by physicians


Practice a personal perspective that reflects the blessings of our profession


Form large, self-governing multi-specialty group practices, organized around the principles of humble service, patient-centered care, and continuous improvement


We must stop focusing on our personal and professional pain and start focusing on how to restore the fulfillment, the culture of humble, altruistic service, and the scientific method to our beleaguered profession.

“How Do You Get Doctors to …?”

Much has been written lately about the rapid evolution of health care in Atlanta, which includes:

  1. Acquisitions, such as Emory acquiring St. Joseph’s or hospitals acquiring physician practices
  2. New infrastructure, including the use of electronic medical records and construction of specialty treatment centers
  3. Collaborative ventures, including the Georgia Health Collaborative and the management agreement between Emory and Southern Regional

In media coverage of these announcements, academics and consultants are often asked “How will these investments create value for Atlantans and the companies who employ them?”  It’s the right question, but by posing it to someone without clinical experience, the answer — some version of “it will enable the new entity to get doctors to …” — often ignores the needs of patients who will be impacted by these changes.

Before we get to the right answer to the journalist’s question, let’s remind ourselves of the root causes of our increasingly unaffordable, lower quality, less reliable, and less satisfying health care system in the U.S.

  1. We pay our doctors and hospitals only when they perform tests and procedures – the “fee-for-service” model. The result is substantial, costly, and, in some cases, risky overtreatment (for more information, see Dr. Atul Gawande’s article in The New Yorker, June 2009)
  2. We don’t routinely coordinate care between different clinical specialties or properly emphasize patient safety. This leads to waste and clinical misadventures (for more information, see: Institute of Medicine (IOM) Report: Best Care at Lower Cost, September 2012).
  3. We don’t focus enough on social and demographic determinants of health. Ignoring these needs means we are treating the symptoms, not the cause, of many chronic illnesses (for more information, see the 2012 HBO series, Weight of the Nation, or

So, the right answer to the journalist’s excellent question should be “The (investment/merger/partnership) will enable (the new/larger organization) to (1) change the mechanism of payment to doctors and hospitals to promote care quality and patient outcomes, (2) systematically hard-wire coordination of care across the organization, and (3) help individuals improve their exercise, diet, state-of-mind and environment.”

The wrong answer is “…to get physicians to do what an outside organization – a health plan, a hospital – wants them to do.”  Why? Physicians are sworn to putting the needs of their patient first. As “knowledge workers”, we must (1) gather and organize large amounts of information, some of which may conflict, (2) accurately predict the outcome of different diagnostic and treatment options, and then (3) conduct an effective shared decision-making exercise with patient and family – all before treatment begins. Organizations seeking to use their larger market or financial presence to insert themselves between the physician and patient add little value and may ultimately reduce quality of care.

As such, physicians must lead the design and implementation of health care investments that address appropriate payment mechanisms, coordination of care, patient safety, and social determinants of health. It’s a proven model – institutions such as The Centers for Diseases Control and Prevention (CDC), the National Institute of Health (NIH), Kaiser Permanente (KP), and The Mayo Clinic have long used systems of effective physician leadership to maximize the benefit to patients and the organization. It’s important we do so here in Atlanta.