A study on pay-for-performance (P4P), the annual benchmark/reward program the Center for Medicare and Medicaid Services (CMS) and Congress are contemplating, reported that hospitals lacking funds and resources will forego quality improvements and attempt to survive on existing reimbursement and no reward. There is division of whether it will work versus “it’s the silver bullet” that will cure provider malaise to improve patient quality. Edwards Deming, the quality guru whose management theories hospitals once considered a silver bullet, was not a pay-for-performance fan. Clearly his teachings did not have any lasting impression on hospital leadership as it dutifully marches behind CMS towards P4P.
Deming concluded that pay-for-performance “focused on the end product” and “not on leadership to help people.” Because of CMS’s power of price controls and power of scripted regulations, it has a substantial leadership role in hospital revenue and leadership behavior. Therefore, CMS is in a position to take a “leadership” role in providing preventive funds to “help” all hospitals to have a reasonable opportunity to reduce preventable medical errors. Although many hospitals even with prevention funds may only make small gains in lowering preventable errors, the prevention funds at least encourage their attempts at success. If a hospital fails one patient, it would pay back the cost of prevention allocated for one patient for the specific preventable error. In other words, paying for excellence and penalizing failure, daily, I believe is more motivating than a complicated grading system that may or may not reward a hospital’s efforts at the end of each year. It is also an immediate savings for insurers since the cost of prevention is cheaper than the cost of healing a preventable clinical error. A “pay-for-excellence-not failure” (P4ENP) approach eliminates government benchmarks as a "rest stop" because if a hospital is truly striving for excellence, benchmarks are just a mile marker in a never ending journey. P4ENF is designed to create the fundamentals of a free market in a one hospital community with little to no competition in the traditional sence. Competition would be between the forces for a culture of excellence against the forces commitment to the status quo.
When refunds for preventable clinical errors become a line item on a financial report, the cost of preventable failure will get everyone’s attention – board members, bankers, bond underwriters, local newspapers etc., and especially, hospital leadership. Since refunds are patient specific, each nursing unit, emergency room, surgery unit etc. know monthly how their efforts measure up and where improvements need to be achieved. This encourages better inter and intra-departmental communication and efficiency between support departments and care teams breaking down the silos that characterize a culture of failure. With CMS and commercial insurers on the hunt for preventable errors to take back prevention funds and hospital staff and physicians focused on eliminating preventable errors to hold onto prevention funds, the focus changes to the well being of every patient. Where the focus belongs!
This transformation opportunity is a save, inspire free market program that can lead to affordable universal healthcare not a “tax, hope to reward, hope to insure everyone” government program that is gaining momentum. True healthcare transformation will not be about creating winners and losers, it’s about giving all healthcare leadership the financial means and incentive to be in the constant pursuit of excellence in clinical outcomes and operational efficiencies where everyone wins.
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