Monday, 28 January 2013

Talk : Financial Incentives for Healthcare

Nottingham Café Scientifique recently hosted a talk by Prof. Ruth McDonald, Professor of Healthcare Innovation and Learning, Nottingham University Business School, entitled “Financial incentives for healthcare – are they bad for our health?”

The talk considered whether the public could trust doctors to ‘do the right thing’ for patients or whether financial incentives were required to do this.

In addition, the talk was based on experience of evaluating some of these recent ‘Pay for Performance’ initiatives in England and California. It described what happened and looks at the lessons we can learn from this.

Why Incentives?
Prof McDonald explained that there had been a number of instances of incentivised contracts being introduced to NHS staff, including GPs (2004), Pharmacies (2005) and Dentists (2006). Prior to these contacts, these groups had been paid simply on the basis of the number of patients they treated, without reference to whether they were being effective at improving patient health. The contracts aimed to align payment with government policy goals, such as reducing obesity, or the number of smokers.

Hartley Road GP surgery

GP Contract 2004
General Practitioners usually operate as self-employed partnerships of doctors and, in 2004, their contracts were radically overhauled to try and incentivise GPS to improve patient outcomes and also to make general practice a more attractive career for medical graduates (at the time there was concern that the average age of GPs was quite high and that there were not enough graduates coming through to replace them).

25% of earnings in the new contract were related to achievement of a series of “Quality and Outcomes Framework” targets, of which there were some 146! - this was in contrast to the previous contract that had tied earnings exclusively to the number of patients on the practice roll. The QOF targets covered four main areas:

• Clinical standards (chronic disease areas such as coronary heart disease (CHD), hypertension or diabetes).
• Organisation standards (patient records, information for patients etc).
• Patients' experience (number of services and how they are provided
• Additional services.

Software was used to allow GPS to monitor their performance against the targets and also to promot them to ask appropriate questions during consultations.

The new contracts were negotiated with the medical profession and agreed via a ballot, so it was certainly not something that was imposed unilaterally.

To sweeten the deal, the new contracts ended the requirements for GPs to provide out-of-hours cover (something that had been a significant disincentive to entering the profession) and also gave practices a “Minimum Income Guarantee”, which required new money to be made available.

So, what were the effects of the new contract?

It is worth noting that there was no historical baseline data against which the impact of the new contracts could be compared, but what can be said is that there was a very high level of target attainment by GPs.

Reassuringly, GP’s did not just reach the targets and then stop - they continued to put resources in to improve performance further, despite it not having any financial benefit for them. In addition, it was found that, over time, the new system resulted in better outcomes for those in lower socio-economic groups, which improved the equity of the NHS GP system.

More disappointingly, it was found that there was little or no change in the prevalence of key chronic diseases such as CHD, asthma or diabetes.

There were also a number of adverse effects of the new contracts…

The government of the day had estimated that GPs would attain some 70% of the targets and had structured the contracts accordingly - but in practice GPs attained around 90% of the targets, resulting in significantly higher incomes for GPs, and extra expenditure for the Government.

Prof McDonald had been curious as to where the “70%” target had come from and had eventually tracked down the source to Tony Snells, clinician who was working in the Health Department at the time. Dr Snells had been approached in a corridor by one of the group drafting the legislation who asked him what percentage of the targets GPs were likely to meet. Dr Snells said that he didn’t know, but the policy drafter was persistent and asked Dr Snells for an estimate, so the Doctor suggested, off the top of his head, that 70% might be a good starting point.

Unbelievably isn’t it?

Morale and co-operation also suffered in some cases. Earnings for practice nurses typically increased by around 3% (nurses had a much wider and more responsible role under the new contracts) - but GP earnings increased by around 38% ! Nurses in one practice who received a token bonus from their GPs would become discouraged when finding out that nurses at another practice had been given payments of several thousand pounds.

Related to the increased role of nurses was a concern that GPs were not getting experience of the more minor and routine ailments of their patients and that this was having a detrimental effect on their overall skill and competence.

Lastly, once the Government realised how much they were “overpaying” GPs, they changed the contract to impose extra tasks on GPs, which led to a loss of trust between the two camps.

Mary Potter Health Centre

Pharmacy Contract (2005)
The Pharmacy contracts introduced in 2005 also had the aim of encouraging improvement in patient outcomes. One example of this was the “Medical Use Reviews” or MUR’s, where pharmacists discuss the medication that a patient is using to ensure that the patient understands all the medication they are taking and review whether it all remains appropriate.

Pharmacies were paid £28 per MUR, but had to get the patient to sign a form. Inevitably, it didn’t look very good that the pharmacist was being paid for giving advice.

On the other hand, pharmacists were often under a heavy workload and found it difficult to make time for MUR’s.

Dental Contract (2006)
Like the GP’s contracts, the changes introduced with the 2006 Dentists contract were far reaching and included the curtailment of open ended funding and patient registration. Treatment had previous been according to a comprehensive schedule that defined specific payments each different type of treatment.

In the new contract, this was changed to collect treatments into one of three bands of “Units of Dental Activity” or UDA’s.

Band 1 (1 UDA) - covers diagnosois, planning and maintenance
Band 2 (3 UDAs) - covers fillings, root canal treatment, extractions etc
Band 3 (12UDAs) - covers complex treatment that includes a lab element, e.g. bridges
Given that root canal treatment can take a lot longer than an extraction - but is paid the same - it is perhaps no surprise that the years following the introduction saw a dramatic increase in extractions, and, possibly, also a decrease in root fillings :

Thankfully, there is much work currently underway to try and devise dentistry contracts that do not contain such perverse incentives.

Other Initiatives
Dr McDonald also commented on a number of other initiatives that has been trialled in recent year such as CQUIN and “Best Practice Tariffs”. However these schemes suffer from the fact that they encourage health providers to adopt a “low risk” approach to target setting as ambitious targets may result in loss of some of the funding. One can imaging the health providers thinking something along the lines of :

“If we try really hard, we might be able to get a 15% improvement in [an outcome], but if we fail we will lose some of the money, so we are better off aiming for 5% so that we get all the available funding”

In contrast, Dr McDonald mentioned the “Advancing Quality” initiative as an initiative that had worked well, with the project having been estimated to have saved some over 900 lives, which was an outcome to unusually positive that it was reported in the prestigious New England Journal of Medicine.

The NEJM compared the initiative to similar project “the HQID program” in the US and commented that,although the UK initiative was a “tournament” in which the bonus’s were paid only to the best performing institutions, “Face-to-face communication, pan-regional participation, and the smaller size of the program in England may have made interaction at these events more productive than interaction at the similar shared-learning events that were run as “webinars” in the HQID.”

The article commented that the greater probability of the UK institutions performing well enough to get a bonus’s was also higher than in the US scheme.


Other comments
Dr McDonald also made a number of interesting comments during the talk or in the Q&A session afterwards…
•As the US healthcare system is largely based on private insurance, it focuses its IT resources on billing, rather than patient care, or the kind of software that prompts doctors to ask questions aimed at early intervention to reduce key chronic conditions. One notable exception to this is the Veterans Administration, who have a large, country-wide IT systems which they offered to make available to other healthcare providers.

•One questioner asked why GP’s were not just simply made salaried civil servants, to which Prof McDonald commented that she had shared this view until she had met some very committed GPs in Liverpool who had made the switch from being an independent practice to being salaried NHS GPs’ - and had found that they then faced the leaden hand of NHS bureaucracy. For example, they could no longer advertise for a receptionist in the local cake shop but now had to go through the NHS regional recruitment process. And neither could that offer tea and coffee to their patients as this was against NHS rules. Collectively, these rules and regulations had caused a number of the partners to quit or consider leaving the GP profession.

•When talking about healthcare spend, it is worth remembering that the US spends some 16% of GPD whilst the UK spends only 8%.

•Patient choice is a topic of much discussion and Prof McDonald felt that that the offering of choice did not deliver benefits in terms of outcomes. For another perspective on this you can read this report by the Kings Fund.


Image Sources: All BFTF's own.