Value-Based Care: Thinking Beyond Financial Incentives

Published Online: July 18, 2014
Katie Sullivan, MA
When it comes to value-based decision making, several factors can influence physician behavior. Although many organizations rely on financial incentives, the Commonwealth Fund argued in a report released Tuesday that healthcare leaders should think beyond the dollars and dimes.

One consideration is intrinsic motivation and professionalism. The Commonwealth Fund said that providers can be motivated when they feel a strong sense of interest and enjoyment in their work. Feeling pride in what they do each day can also encourage providers to make certain decisions. For instance, meaningful financial incentives can motivate providers to avoid losses. The Massachusetts General Physicians Organization paid physicians bonuses upfront; however, if providers did not meet certain performance standards, some of that money would have to be returned.
Peer comparison also can influence behavior. When cardiac surgeons across Pennsylvania were presented quality report cards that compared their performance with other surgeons, This tool had a 4 times greater effect on their performance than profit-based incentives.

Organizational influences — such as company culture, management approaches, and operational structures— as well as federal, state, or local policies can also impact provider decision making. A study  by researchers at Yale determined that hospitals with a clearly stated mission, highly-invested senior management teams, and “nonpunitive approaches to problem-solving” had lower 30-day mortality rates for heart attack patients compared with other hospitals.

Philadelphia-based Independence Blue Cross (IBC), which launched an accountable care organization nearly 3 years ago, discovered that financial incentives or bonuses designed to change physician behavior also should be generous.

"A lot is being asked of them and reimbursement is dwindling. If you really want them to do more, you have to compensate them fairly so they can afford to do more for fewer patients and manage them comprehensively," Doug Chaet, senior vice president of contracting and provider networks at Independence Blue Cross, said in an interview published Wednesday. He also agreed that payers and providers need to collaborate if they are to achieve value-based outcomes.

In fact, to really drive value decision-making, most policy experts agree that physicians should be involved in the process of developing incentives and quality metrics.

“You have to treat your doctors like partners. Most hospitals get it, some don't. You still have a few old-school CEOs who think that doctors are indentured servants and not partners,” said Max Reiboldt, president and CEO of the Coker Group, a Georgia-based healthcare consultant.

The Commonwealth Fund launched an initiative which aims to unearth provider incentives that will drive” high-quality, high-value care.” The group said its “Incentives 2.0” initiative supports 4 initial projects, including 1 that will use behavioral and psychological insights to develop design principles for financial and nonfinancial provider incentives, and another that will compare how financial incentives impact primary care practices improvement levels differently.
Around the Web
Incentives 2.0: A Synergistic Approach to Provider Incentives [The Commonwealth Fund]
IBC: ACOs Require Provider Input, Engagement [Fierce Health Payer]
Doctors' Employment Contracts Due for Renewal—and Revamp [Modern Healthcare]