Incentive: The Missing Ingredient in Performance Measurement and Management (PMM) in Courts
Woody Allen is said to have once quipped: “I was in a warm bed and, all of a sudden, I found myself in the middle of your strategic plan.” What will it take for courts and other justice institutions to get out of their warm beds and embrace performance measurement and management (PMM)? What are the incentives?
Business Incentives Do Not (Yet) Exist for Courts
For private sector organizations, PMM is an imperative, an essential business evaluation tool that is a matter of survival. In the long-term, if profits are insufficient to cover expenses they surely soon will be out of business. In the short-term, if cash-flow does not cover employee salaries, they will close their doors sooner. Other than net profit and cash-flow, critical measures for businesses include return on investment, market share, customer satisfaction and loyalty, and employee engagement. For businesses moving the needle on these measures in the right direction provides both an incentive and a tool for improvement. Success in one area can prompt focus on doing better in other areas.
For courts and other justice institutions, such incentives do not exist. While some courts have been closed or placed into receivership (e.g., the Detroit Recorder’s Court in the 1980s), the rarity of such occurrences are exceptions that prove the rule that survival is not an everyday worry for courts.
Parallels in Health Care
In previous posts I have explored innovative financial incentives for PMM for courts (e.g., gainsharing, a type of profit-sharing system used by local governments and at least one court). And, like many of my colleagues, because hospitals and doctors, and courts and judges, are much alike, I have looked to health care for ideas (e.g., “never events” in court administration).
In a recent op-ed in the Wall Street Journal, Ezekiel J. Emmanuel, Chairman of the Department of Medical Ethics and Health Policy at the University of Pennsylvania, describes an innovated pilot program, Independence at Home, that merits scrutiny by court leaders and managers. The program is part of a movement in health care to reward providers based on quality, not quantity of care.
Dr. Emmanuel begins by describing a wheelchair-bound 87-year-old patient in the program, Luberta Whitfield, who suffered a stroke that left her right side paralyzed a few years ago. She has emphysema and diabetes, is dependent on oxygen, and recently tore the right rotator cuff on her good arm. The program gives the sickest Medicare patients like Ms. Whitfield primary care right in her home. Since it launched in 2012, it has succeeded in delivering high-quality care at lower costs than traditional Medicare. Thanks to the program, Ms. Whitfield still lives in her own home. Here’s how the program works.
Patients who qualify for Independence at Home need to have been hospitalized in the past year, suffer from two or more chronic conditions, require help with daily tasks, and must have needed services such as a stay in a skilled nursing facility within the last year. These are the type of patients that are the key to saving money; they make up 6% of Medicare patients but account for nearly 30% of Medicare’s cost. According to an analysis by the Centers for Medicare and Medicaid Services (CMS) cited by Dr. Emmanuel, these patients are so sick that 23% die each year and each account for $45,000 in annual Medicare spending. He contends that the program could save Medicare tens of billions over ten years.
Once in the program, patients receive coordinated primary care focused on keeping them healthy and in their home and out of the hospital. Emmanuel characterizes the care they receive as “concierge care for the sickest – not the richest.” Now here’s the intriguing part that may be of interest to court administration.
Physician groups who join the program and bid to provide the Independence at Home services have financial incentives in the form of bonuses to keep patients out of the hospital, which saves money, while still meeting Medicare’s quality standards. Bonuses are given only after the total costs for their patients’ care is reduced for two consecutive years. If they fail to achieve these reductions, they cannot share in the savings.
In a June 2015 press release, the CMS announced good results for the first performance year of the Independence at Home demonstration, including both higher quality care and lower Medicare expenditures. The CMS analysis found that the 17 physician groups in the program saved an average of $3,070 in the care of 8,400 Medicare beneficiaries in the program's first year, for a total of more than $25 million in savings, while delivering high-quality health care at home in accordance with six quality measures (e.g., fewer hospital readmissions within 30 days). CMS announced that it would award incentive payments of $11.7 million to nine of the participating physician practice groups.
Can This Work for Courts?
Critical features of the Independence at Home pilot project are its focus on the quality of care, not quantity, and its dependence on measureable outcomes supported by rigorous PMM. As I noted in my previous posts on gainsharing, notwithstanding questions of legality and opposition on philosophical or political grounds (e.g., court excellence is mandated by law and, therefore, should not be supported by financial incentives), the success of this CMS demonstration project bears close watching as a model for courts. Incentive payments could be triggered, for example, by sustained reductions in cost per case, a relatively underused court performance measure that is part of both the CourTools and the Global Measures of Court Performance, achieved without loss of quality in accordance with stringent standards and criteria for various case types.
As my colleagues Victor (“Gene”) Flango and Tom Clarke suggest in their book, Reimagining Courts: A Design for the Twenty-First Century, courts need to be reimagined and transformed. They should innovate continuously. The gap between government’s information technology, including that of courts, and the private sector seems not to be shrinking but widening. People expect access to government services and assessing quality as easily as looking up a restaurant on Yelp or Google. Incentives for good performance outcomes, the modus operandi in the private sector, need to find their way into court administration as they are slowly making their way into health care.
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