Cost and Quality
The concept of the omnipotence clinician who “knows best” was dominant since the time of Hippocrates until the Second World War. The challenge came from two directions; first, the notion that poor clinical outcomes might reflect faulty investigations, diagnosis or treatment (the quality), and second, the fact that some investigations and treatments are more expensive and often are used inappropriately (the cost). Regarding the quality aspect of the problem some argued that the major problem was trusting in human minds consistently.
The response to these cost and quality problems in United Kingdom was clinical audit as a peer review activity; either in local level or national level. The principles of audit is that the clinicians critically review results of their own work on a regular basis and compare those results with those of others, and if there are lessons to be learned change their practice. In the United States it was used either professional review with mandatory second opinion or professional reviewers to check that the elements of care were within predefined limits. This wave of clinical audit was failed. The problem probably was that there was a conflict between clinical audit as a tool for education and professional development and its use for monitoring performance. The principle of audit was good but the practice of it was bad (2).
The question of cost and quality is still considered to be of great importance in healthcare. There have been attempts to promote the quality of care as well as to cost control and reduction by introducing different incentives in different healthcare financial systems. It has been suggested that payment should be attached to providers’ behaviour and that all types of health plans should have strong incentives to improve performance and encourage delivery system change. Performance measurement as well as quality measurement and reporting systems are prerequisites for improving performance. However, focusing on cost and quality separately may be the wrong way of solving either problem (88-94).
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Impact of financial incentives on quality improvements
We know that the use of financial incentives to influence behavior is common in all areas of commerce. There are a good amount of research on and literature about the design and impact of incentives at different levels, i.e. the principal-agent relationship in theoretical economics (examining financial incentives in contracts under different assumptions), employee compensation (compensation with different payment approaches to encourage desired behavior), or consumer responses to targeted incentive programs in marketing literature.
Interest in the impact of financial incentives on provider behavior has traditionally been focused on the need to improve efficacy (in publicly funded systems) and a desire to moderate the growth in healthcare costs (in market-based systems). Recently, there has been increased interest in specific relationships between financial incentives aimed at providers and quality of care. However, the amount of research devoted to the impact of financial incentives on the quality of care is limited. The quality of care, as mentioned earlier, is defined by Institute of Medicine as ”the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge”.
In 2007 a comprehensive review of the literature examining the effect of financial incentives on the quality of care delivered by health care organizations and practitioners was published (Financial incentives, healthcare providers and quality improvements: A review of evidence) (95). The reviewers used an extensive infrastructure of search strategy and involved several credited organizations like Agency for Healthcare Research and Quality (AHRQ), Organization for Economic Co-operation and Development (OECD), and World Health Organization (WHO). The review illustrated that the literature on the influence of financial incentives in provider’s quality of care was not fully developed. However, there could apparently be noticed an ongoing change at a relatively rapid pace.
At the same time the science of measuring quality in the healthcare is increasing and financial responsible bodies are intensifying their efforts to measure and reward quality improvement. This will probably generate a significant amount of new research that has at least two tasks; first to
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document the relationships between financial incentives and adherence to best practices or changes in patient outcomes, and second contribute to a better understanding of the linkages between financial quality rewards and practitioner behavior.
The findings of “Financial incentives, healthcare providers and quality improvements: A review of evidence” can be summarized in the two sections:
1. Financial incentives directed at improving quality and 2. Secondary impacts on quality of financial incentives directed at reducing utilization and costs.
These two sections are reprinted in appendix 6.
Impact of quality improvements on cost reductions
Poor quality and adverse events are common and costly. In the UK, one in ten hospital patients suffer an adverse event (infection, adverse drug event, surgical complication, and fall) that necessitates extra treatment. Poor quality may be defined as suboptimal care in form of overuse, misuse, and underuse of tests, treatments, and services or ineffective use of them. Failure in communication, transfers, and coordination are other aspects of poor quality.
Improvements and interventions, which do cost but make care better, may be defined as changes that result in a better health service for patients.
To increase quality and productivity and decrease waste, health personnel may be organized in project teams and use different methods to change their work and organization. There is strong evidence that changing providers’ behavior to use patient safety practices or validated effective treatments at clinical level will improve patient outcome. There is also evidence that some of these behavior changes save money or increase income for some providers (96). The two important areas connected to improvement are effectiveness and savings.
In respect with effectiveness there is evidence for effectiveness of some interventions (like computer physician order entry or prophylaxis before surgery), but there is less evidence for effectiveness or costs of other suggested interventions.
Regarding costs, quality improvement can be costly especially where there is little infrastructure or experience to support improvement. There are also great variations in implementation of interventions. We know that provider’s quality improvement often does not lead to saving because the financial systems does not measure or reward higher quality. On the other hand and
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strangely enough, providers may have financial disincentives to make improvements; firstly they bear the intervention costs, secondly they cannot get the investment finance, and thirdly they are financially rewarded for poor quality.
Briefly, improving quality sometimes saves money and sometimes does not.
Savings depend on the type of improvement, the cost of it, and who pays the cost of poor quality. Due to limitation of research and lack of evidence we do not know if improving quality saves money or not in majority of cases. But we should not forget that available research, as mentioned above, illustrates that improving quality sometimes saves money, and describes when, where and why it does so. The following equation illustrates the role of different elements in improving the quality of care (96) :
(Evidence of an effective change) + (Effective implementation method) + (Supportive environment and infrastructure) = Improved quality
Research may provide information about all these elements to the providers.
But a key factor in determining whether providers make savings is the amount of the costs they bear i.e. the costs of poor quality and the costs of intervention solutions. Sometimes providers are paid extra by purchasers to treat the adverse events. Recently, some purchasers in the US shifted the costs of some adverse events to the providers by introducing “never events” which involves exclusion of providers from reimbursement as financial penalty for not achieving certain standards.
Financially it should be made more advantageous for providers to increase quality. In order to do this routine financing systems should be changed and performance measurements should include quality measures. The new financing systems should
I. ensure that providers bear more of the costs of poor quality, especially where their costs shift to other stakeholders (like in case of delayed transfer and lack of prevention)
II. measure quality and quality costs in routine service settings III. finance local improvement expertise
IV. spread the investment costs for interventions over time and between providers, purchasers and others
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Saving money is not a strong motivation for clinicians to improve quality.
Ethical, moral, and professional motives are also important for clinicians, but these alone have not proved sufficient for improving quality.
In summary, there are enough evidence to show which changes we should focus on and how we should implement them. The cost of inaction and not using this knowledge is probably high, both financially and in terms of human suffering (96).