If any of mainstream economic theory’s assumptions are true, it is that incentives influence behavior (another is that for-profit firms that are legally mandated to maximize profits [see Ebay v. Newmark] will, in fact, maximize profits). If financial incentives under fee-for-service induce physicians to create demand (by prescribing un-valuable services), then realigning these financial incentives under a model that rewards quality and value should, one would predict, induce better quality and higher value instead.
Managed care organizations (MCOs) have sought to reduce utilization by binding physicians’ financial interests to the rationing of care (essentially, by paying the gatekeepers to reduce access). While this incentive model – much like the prospective payment and episode-based payment models – has been highly successful at reducing utilization, it does not aim at, and so does not effect, better outcomes for patients or improved health metrics for the population. Perhaps worse than having no effect, the MCO incentive model may have inverted ex-post moral hazard such that, to the degree physicians’ interests are bound inversely to utilization, patients risk receiving too little care.
If we “get more of what we pay for”, then incentive models should pay for what we want more of – namely, health and well-being. As obvious as this seems, only relatively recently have such incentive models for healthcare financing emerged in the US. Just as disappointing as their long delay, their results have been only mixed or modest. To provide a very meta reference for such an assertion, I refer to Eijkenaar, Emmert, Scheppach, and Schoffski, whose 2013 muliti-language systematic review of systematic reviews (Health Policy, volume 110, issues 2-3, pages 115-130) sought to identify any kind of consensus on or convincing evidence of improved health outcomes under pay-for-performance healthcare financing models (an explicit outcomes-based incentive model). to quote:
“Findings suggest that P4P can potentially be (cost-)effective, but the evidence is not convincing; many studies failed to find an effect and there are still few studies that convincingly disentangled the P4P effect from the effect of other improvement initiatives. Inequalities among socioeconomic groups have been attenuated, but other inequalities have largely persisted. There is some evidence of unintended consequences, including spillover effects on unincentivized care.”
Why is this so, if, as was asserted at the start, “incentives influence behavior”? Why haven’t attempts to realign financial incentives been more clearly and robustly successful at altering clinical outcomes or population health status?
I would argue that the cause for low return on healthcare expenditures – regardless of incentive model – has more to do with healthcare being the wrong investment and clinical practice being a poor arena from which to truly impact health than it does with imperfect agency or moral hazard.
Healthcare is the wrong investment because it is inherently resource-intensive and treatment-focused. When we allocate the greatest proportion of society’s finite resources to treatment, we create a system that can, at best, only tread water, and at worst, be swept downriver to drown in the sea.
There is a vacuum of vision, of organization, of resources, and of accountability for population health in the United States. The inherent intersectorality of the disparate determinants of health has left the mantle of responsibility for the nation’s health as yet unclaimed. Physicians – who so far, have born responsibility only for the population’s sicknesses – have already been entrusted keys to the lion’s share of society’s enormous allocation of resources towards the hope of good health. It is now time, if the profession wishes to remain center stage in the acts to come, for physicians to accept responsibility for ensuring the population’s health.
Physicians, restricted by the narrowness of convention and professional identity to their current treatment-focused role as the mechanics of the human machine, are missing the grand opportunity, existing only within the US’s unique environment, to apply their knowledge and influence upstream as health engineers and prevention strategists. Given the central role physicians have come to enjoy in the American healthcare system, the authority, respect, and prestige they command at-large in American society, and especially, the influence they bear on the American economy and on her policy (being uniquely positioned at the levers of both the supply and demand curves of healthcare cost and consumption), the American public’s health – broadly defined – will not significantly improve until physicians reimagine and reposition their profession further upstream, nearer the socioeconomic determinants of their patients’ health. Physicians must become health advocates more intimately engaged with the leverage points of the system. They must become health defenders prepared to lead trans-professional and trans-sectorial teams in the promotion and protection of the inextricably interdependent well-being of individuals, communities, and populations. Only then will society’s demand for health – and return on her enormous investments – truly begin to be supplied.