Pay for Performance: Doctors, are you ready?

A major topic at this week's Disorders of the Spine conference at Whistler, B.C., was pay for performance.  It is no secret that surgical and treatment outcomes in medicine are all over the place, or that employers and payors including the federal government are starting to hone in on how to correct these variances.  They are using a classical "carrot and stick" approach.  Prove to us that you have the best outcomes, and we'll pay you more (or at least pay you something).  Continue to hide behind the "art of medicine" argument and we'll pay you less or not at all.  

The major payors are already well positioned in this battle.  They have lots of data.  I wish the same was true for my beleaguered colleagues in the clinical trenches.  Although many large group practices are now collecting their own data due to early adoption of robust electronic medical records systems, most docs will find themselves ill prepared to fight.  And mind you, this will be a war. With vast resources, advanced analytics, and years of claims data, the insurance companies are poised to hammer outliers be they individual doctors, entire practices, or hospitals.  How will you fight back?  You must fight back with data of your own.  At the conference there was a rallying cry for physician groups to band together, to share outcomes and best practices.  Only then, it was said, will clinicians be able to level the playing field in this war over increasingly scarce healthcare dollars.  And in order to have data, I guess it can be said there is yet another and very compelling reason to invest in an electronic medical record system for your practice. 

Speaking of scarce healthcare dollars, let me link to a related theme I saw on today's wire; that of our precarious hospital pricing system.  Current pricing practices routinely allow for highly profitable departments and services to subsidize ones that otherwise wouldn't make it on their own.   Researchers suggest that greater transparency in pricing, deregulation, and consumer directed healthcare plans may have an effect on hospitals similar to what we are experiencing in the airline business.  Predictions are that many hospitals would have to cut unprofitable services or risk the fate of big airlines; going into bankruptcy.  For more on that theme, check out the article by Stuart Altman, David Shactman, and Efrat Eilat at

Let us know what you think.

Bill Crounse, MD   Healthcare Industry Director   Microsoft Healthcare and Life Sciences


Comments (3)
  1. Hi Bill,

    We are actually hosting an audio conference on this topic this week, focusing specifically on the Centers for Medicare and Medicaid Services Voluntary Physician PFP program:

    Our speakers will be talking about the opportunities that may exist for physician groups under this program as well as challenges, including the IT requirements, for this type of reporting.

    Melanie Matthews

  2. Mike Finley MD says:

    Hello and thank you for the Blog

    The pay for performance concept will start slowly, but like many changes in the past few years, the growth curve will accelerate quickly and consume our profession before we know it.

    Most doctors will be unable to supply required information and once again (HIPPA rerun) will be forced to purchase expensive ‘services’ from those who make millions as parasites of our industry (makes me think ‘HealthGrades’).

    Most of health care is provided in small offices where primary care doctors struggle to see 50 patients a day in an increasingly regulated, volume driven environment of lower reimbursment, higher expenses, and unrewarding day to day grind. To add another high dollar contract service to these offices just to provide information to payers so that one can get perhaps a bump of 2 or 3 percent will add more injustice.

    With Medicare constantly threatening to reduce payments (and some day they actually will cut us by 4% a year), there will come a time when doctors bail out. Remember the scene on ‘Wall Street’ when there was a question of whether foreign investors would ‘roll over’ investments or not? This is the way it will be when doctors really do opt out of Medicare. The ‘Tipping point’ will come and the government will not be able to stop it. Before we know it, all of us baby boomers will not have access to primary care as we know it.

    When that happens, the ‘change’ will drive faster toward the $5 minute clinic type providers at your local department store.

    Take it from one who gave up practice 5 years ago and never looked back. On our Sunday shopping trips, I still run into former patients who tell me how much they miss me.

    Well, I certainly don’t miss paying everyone else in the office first and hoping there is enough left so I don’t have to write myself a credit card check. Or taking 30 minutes with a patient only to have the payer down code my office visit to minimal for not meeting medical necessity. Fighting 6 months on appeal just is not worth it.

    In primary care we quickly became a business where our customer wanted bargan basement prices for first class service. Sorry, folks, that just does not work for those of us who went into the profession to provide compassionate, excellent medical care to all we see.

    As a Medical Director for a large system, I now very much enjoy what I do. I feel the pain of my doctors and try to give them the autonomy and recognition they so dearly crave. I also deal with our Generation X doctors who will be the ones to replace us. No, they will not sell their soul to the profession like we did, and no, they won’t sacrifice their families and all their time to it, but I am beginning to think they may be right not to do so.

    Thanks for the opportunity to post a response. My newly created Blog is:

    I welcome your visits

    Mike Finley MD

    Family Doctor

  3. Bill Crounse, MD says:


    Thanks for sharing your open and honest comments.  I recently wrote a piece on "5 trends to watch in healthcare".  Two of those trends, the retailization of healthcare and dumbing-down the profession, are a direct result of the pain being experienced in primary care.  Both doctors and patients are feeling the pain, and the situation will get much worse as the demand for services increases while the supply of providers declines.  Who will be willing to spend seven or eight years in post graduate study taking on massive debt to become a primary care physician?   Primary care will move to the big-box stores and be delivered by nurse practitioners.  It will be efficient and less expensive.  Perhaps, the masses will be better served.  And all family doctors (those still willing to go into the profession) will become corporate "medical directors".  At least they may get some retirement benefits and paid vacation.

    Bill Crounse, MD    

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