Cartoon of man holding carrot in front of another man while prodding him with a pitchfork in the other

Every day in health care settings across the country, payers, providers and patients make decisions that impact service delivery and patient outcomes. The struggle continues as the health care system goes through, in some cases, radical transformation. The health care field seeks to improve the assessment, diagnosis and treatment of various health conditions, including mental health, that result in good quality care and positive health outcomes.

Once again the conversation circles back to “the stick or the carrot.” Which is the strategy (or set of strategies) that will effectively change provider behavior resulting in improved quality of care, improved health outcomes and decreased costs?

According to a recent blog posted Tuesday, July 15, the Commonwealth Fund’s blog authors Mark A. Zezza, Anne-Marie J. Audet, M.D. and Dominique Hall announced a new and exciting portfolio of work in the Breakthrough Health Care Opportunities program. “Incentives 2.0: A Synergistic Approach to Provider Incentives” explores the use of strategies to influence provider decision-making and promote higher-value, outcome-based health care.

The authors remind us that financial incentive strategies such as pay-for-performance programs have had limited success in improving outcomes and controlling costs. It is important to note that a wide range of factors influence providers’ choices, beyond financial rewards or penalties, including intrinsic motivation and medical professionalism, organizational influences and policy advancement.

The initiative will be seeking insights from diverse fields of study such as economics, psychology, nursing, social work, sociology, and the management sciences in order to identify influences, understand how they affect behaviors, how these influences interact with each other, and develop ways to use them to optimize health system performance. A huge undertaking indeed!

Some examples of approaches that might result from this work include:

  • Redesigning financial incentives so they are more meaningful to providers. Psychological research has shown that people tend to spend more effort avoiding losses than achieving gains of comparable value. For example, Massachusetts General Physicians Organization has found it effective to give upfront financial rewards to providers, with the potential to return some of the funding if performance standards/measures are not met.
  • Leveraging providers’ innate desire to do a better job. Psychological research also demonstrates that nonmonetary motivators, such as peer comparisons, may actually strengthen providers’ inherent desire to perform well. The introduction of quality report cards for cardiac surgeons across Pennsylvania had a four times larger effect on surgeons’ performance than profit incentives.
  • Creating an organizational environment that promotes high performance at the provider level. The link between strong organizational culture and top performance is well demonstrated. One study found that hospitals with a clear mission, highly involved senior management teams, and non-punitive approaches to problem-solving had lower 30-day mortality rates for heart attack patients than did other hospitals.

The initiative seeks to create a “model” or “guide” for how to combine various influences in ways that can lead to a real breakthrough in performance.

Four projects are highlighted showing how innovators are working to design provider incentives that drive high-quality and achieve high-value care – and most importantly, contribute to improved health outcomes.

The program aims to identify opportunities and make changes in health care that can have large-scale impact. At the end of the day, that’s what it’s about, right?

I have always said that true health care reform cannot happen without payment reform. There are many pilots underway across the US examining value-based payment versus our current volume-based payment system, an approach that is perpetuated by the current fee-for-service reimbursement system. We must disrupt the status quo and look towards other payment models that hold providers accountable for high quality and positive health outcomes. The authors remind us that “In any industry or field, a little disruption every once in a while―and, sometimes, even a major shock―can be a good thing.”

Updates and lessons learned from these programs will be available on the CMWF website throughout the year. Stay tuned! More to follow….