Physician technology to assist with ultrasound procedures.
Physician technology to assist with ultrasound procedures.

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Pay for performance

Table of Contents

Pay for performance (P4P) is an emerging trend that uses economic incentives to encourage health-care providers to focus on getting the best outcomes. Many physicians are concerned about how this will affect their future and what they can do about it. Health-care experts say P4P is unavoidable and, in the end, is a good thing, so you will want to get used to the idea.

The principles of P4P

“The over-riding principles of patient safety, quality, satisfaction, and efficiency are driving the move toward P4P,” says Mary Jean Sage, the president of The Sage Associates in Pismo Beach, CA. The Center for Medicare-Medicaid Services (CMS) has a demonstration project under way and a number of larger employer groups and payers have their own pilot programs. The objective is to improve care while reducing inefficiencies that contribute to a continued rise in health-care costs. So what’s a physician to do to get ready for such a program?

“Physicians must be informed and involved to make a difference in outcomes,” says Donna Weinstock, a practice management consultant in Northbrook, Illinois. “The goal is promoting quality care and being compensated for the increased standard of care.” Learn what you can about what’s in the pipeline with P4P and how it is evolving. It will help you determine what actions you should take within your own practice.

Avoiding it won’t make it go away. “Some physicians are protesting the intrusion on their clinical autonomy, while others are fretting about the implications of non-compliant patients,” says Jack Valancy, a practice management consultant in Cleveland Heights, Ohio, “but it’s a good idea, because it will nudge physicians toward practicing evidence-based medicine, which will raise the overall quality of care.” Busy physicians resist one more thing expected of them when they struggle to manage the demands they already face. Just the same, you can’t put your head in the sand.

According to Sage, “most programs primarily measure process—how often doctors provide patients appropriate treatment or tests in a number of ‘key’ areas.” These programs are designed to address quality issues and improve outcomes, including preventive care and continuity of care. “The goal is to add measures of medical outcomes, such as how well a physician group manages the blood-sugar level of diabetics or blood pressure levels for hypertensive patients” Sage added. The emerging programs focus on these three components:

1. Patient satisfaction: What the patient actually experiences

2. Adoption of computer technology

3. Effective clinical treatment and preventive measures

The biggest stumbling blocks are the costs to acquire information technology to get at the data, determining what to measure, and having realistic incentives built into the program. Of these, the technology piece seems to be the most ominous.

Electronic medical record (EMR) systems, sometimes referred to as electronic health records (EHR), are costly to purchase and integrate into the practice. According to our experts, implementing an EMR system is likely to play a role in financial incentives tied to future P4P initiatives developed by third-party payers. “There has to be enough dollar difference to make it worthwhile,” says Owen Dahl, a health-care business consultant in Houston, TX. “A small percentage increase or return will not change behavior.”

EMR systems: Important parts of P4P

Realistically, if you haven’t looked at purchasing an EMR system for your practice, it’s time to get serious. Not only will this be an important component of getting ready for P4P, but such systems add incredible efficiency to the overall practice. Yes, it’s costly to implement an EMR, but most practices recoup the costs within 18 months with reduction in staffing and time savings. Physicians report being able to see more patients with better documentation after implementing an EMR system—and physicians and their clinical staff find they work in “real time” which often means getting out of the office earlier at the end of the day. The on-call doctor can access patient records off-site. This helps him make the best decisions for the patient after hours, which can directly affect the patient’s clinical outcome.

As for young physicians who are just getting started, it’s hard to say how much P4P will affect them. “They should have the latest and greatest knowledge in place” says Dahl. If they join a practice, they can play an important role in moving the practice to a higher performance level and influence change, whereas the old guard are more likely to want to keep that status quo. “Don’t flatly discount the idea of P4P if asked to participate,” added Sage. Find out what’s involved—the challenges and the potential benefits. The more you know, the better off you will be when it’s time to make decisions for your practice.

“At this point, participation in P4P programs is often voluntary, so each practice needs to assess how feasible it is to participate” says Sage. “Who will measure what and how will it affect costs and revenue—and what will the future hold if you don’t participate?”

One of the primary factors in implementing clinical measures is physician agreement on how you will measure quality. “Do you know, understand, and agree?” asks Dahl.

Measure what you can measure easily that can affect change without turning your practice upside down or causing you to spend endless hours and a great deal of money administrating it. It doesn’t have to be complicated.

Patient satisfaction is a good starting point. It’s already being measured by the payers, so do your own survey and respond to the results. Tap into your scheduling system for starters. Start with access. How long does a new patient have to wait for an appointment and is it reasonable? Are you meeting existing demand? Sometimes it’s a matter of tweaking the scheduling system.

Find out how responsive you are to phone calls by documenting when the call came in and when disposition was complete. If you monitor this for a few days it can be very telling. It may mean it’s time to set a standard for timely response for clinical calls and improve efficiency so the standard can be met. Of course, you will need to monitor your progress by spot checking performance from time to time.

Most experts agree that when it comes to conducting patient satisfaction surveys, it’s not in your best interest to do a home-grown survey. Hire a health-care marketing consultant. The survey is useless if it is not a valid sampling or if the survey instrument is not designed to objectively measure the findings. Besides, your management team is unlikely to have time to dedicate to such an ambitious project. The power of the survey is your ability to act on the results—tout what you do well and take corrective action where your marks indicate performance is weak.

It may seem overwhelming and costly to implement an internal program, but it’s not necessarily so. As far as clinical measures, tackle something where the information is easy to get and to which you can respond effectively. For example, flu shots on your senior citizens. Most practice management systems can pull the data to let you notify patients to get their flu shots and you can improve access by conducting regular flu shot clinics during the season.

Electronic communication allows you to inform your patients when it’s time for an annual examination or for diagnostic follow-up on certain conditions. The good news is these oneway communication systems are very affordable and they can access data directly from your practice management system, saving you endless hours. It’s time to move beyond the basic appointment reminder system.

A powerful website is one of the best and least costly investments you can make to get a program rolling. When a website is properly designed, it becomes an interactive tool to share information with patients and keep them educated. You can establish links to send patients to sites that provide information about their condition and access to support groups you choose to recommend.

You can even develop an e-newsletter to share clinical information and improve compliance. For example, in the late spring you may want to remind patients it’s time to get out the sunscreen. In the summer, remind parents to schedule the exams for their children and get them immunized before school starts, and in the fall let patients know when you will be having a flu shot clinic. Add to this an e-mail reminder system for annual paps, mammograms, diabetic eye exams, or whatever applies to your specialty. These reminders can be reinforced with a “message on hold” system for patients who call into the office and are in the queue.

Improving compliance and outcomes

With a little effort and ingenuity, you will be on your way to improving compliance and, ultimately, outcomes.

In reality, everyone is paid for performance. The more efficient any business is, the more profitable it will be. Not only will you improve the practice’s financial margins by implementing a formal P4P program, it is expected that third-party payers will provide as much as a 10-percent differential reimbursement for the top performing practices. When this occurs, group practices are likely to establish compensation programs that reward individual physicians in the same manner.

There are lots of reasons to get on board with plans to implement programs that measure quality and provide intervention in areas where performance is weak. The ultimate gain with P4P is to improve the health of the patients.

Our experts agree that P4P is here to stay. “I expect Medicare’s P4P system will be revised before it’s adopted on a broader scale and will be continuously refined as new evidence emerges” says Valancy. Physicians should be willing to think differently.

“You may need to shift your way of practicing medicine and cultivate a new mind-set and skill set to track illnesses, develop reminder systems to improve compliance, and distribute patient education materials,” Sage says. “When a program is properly administered, it becomes a win/win situation for both the physician and the patient,” adds Weinstock.

If you are part of a bigger practice you may already see P4P initiatives emerging or they are likely to be a factor in your future compensation—that’s called accountability! If you are a solo physician or part of a small practice, don’t be intimidated by what you hear. Gather information and take small steps to get yourself started with implementing a program that makes sense for you—something you can commit to that will measure outcomes and customer service.

In the end, the emergence of P4P may be an opportunity for physicians to reevaluate their own practices. Define who you are and what you are all about. What is your practice’s philosophy and purpose? Make a commitment to take concrete, measurable steps to be sure you are living your mission.

Judy Capko is a health-care consultant with more than 20 years experience and the author of Secrets of the Best Run Practice. Her focus is practice operations, staffing, finance, and marketing. Judy is based in Thousand Oaks, CA and can be reached via email: or through


Judy Capko

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