Outcome-Based Performance Measurement Is Becoming the Norm

Hospitals across the country are being pushed and dragged into outcome-based performance measurement systems with increasing incentives for providing quality care and better outcomes. Proponents argue that such systems discourage unnecessary treatments, keep people healthier, and reduce overall costs.

Janet Adams reports in today’s Wall Street Journal ("Wellpoint Shakes Up Hospital Payments," May 16, 2011, B1) that Wellpoint Inc. is raising the stakes for 1,500 hospitals in 14 states serving 34 million people on its Blue Cross Blue Shield plans by cutting off annual payment increases to the hospitals if they fail to deliver quality patient care. Under the new system, Wellpoint will pay increases only to those hospitals that earned them by scoring high enough on outcome measures of treatment quality including how satisfied patients were with the care they received. The change is part of a broader trend in the health care industry toward a compensation approach for health care providers based on the quality of their care, instead of the number of tests performed or treatments provided.

Predictably, hospital insiders are pushing back. “We don’t have good outcome measures yet,” Chip Kahn, president of the Federation of American Hospitals, is quoted saying by the Wall Street Journal. “Many things will happen 30 days [after discharge] that have nothing to do with the hospital care.” Of course, this sounds like the all-too familiar retort for any kind of outcome-based performance measurement system (see “Ten Reasons Not to Measure Court Performance,” Made2Measure, November 19, 2008).

While the incentives and operating environment of hospitals and the health care industry differ from those facing courts and justice systems, I believe that court leaders and managers ignore this broad trend toward outcome-based performance measurement and accountability at their peril. (See also “Measurement of Hard Outcomes Trumps Process Measurement (Again)," Made2Measure, October 21, 2010)

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