Medical Device Daily Washington Editor

BOSTON – The plethora of pilot projects designed to evaluate pay-for-performance (P4P) initiatives was itself the subject of some discussion at the P4P leadership summit here this week, and at least one of these — the rather large effort by the Centers for Medicare & Medicaid Services (CMS; Baltimore) and Premier (Charlotte, North Carolina) – has yielded data suggesting that outcome-driven reimbursement may be more than just the flavor du jour.

Richard Norling, CEO of Premier, provided a breakdown on the first eight quarters of returns from the Medicare P4P pilot project, but also advising that the analysis covered only the first four quarters (the numbers from the second four quarters not yet fully analyzed).

Despite this note of caution, however, Norling clearly was excited about the statistics and their positive implications.

He referred obliquely to the change in mindset needed to make P4P work by stating that “clinical quality and financial performance are inseparable.” Efficiency without quality is “unthinkable,” he said, and quality without efficiency “unsustainable.”

As is widely known, the CMS/Premier project examined how P4P influences outcomes for five areas of hospital practice: hip and knee replacements; coronary bypass grafts; infarction; community-acquired pneumonia; and heart failure. Hospitals improved on all composite quality scores in each condition in each of the eight quarters, which Norling termed “dramatic and sustained improvement.”

He said that this is the first “significant study showing the association between more reliable care and lower cost,” with his presentation focusing on the pneumonia and bypass sections of the study, which drew from the records of roughly 75,000 patients.

Hospitals that scored in the top 25% quartile for adherence to the performance guidelines incurred an average expense of roughly $8,400 for each pneumonia patient. Hospitals in the second quartile ran up an average bill of more than $9,100 per patient, and those in the lower half spent on average almost $10,300 per pneumonia patient, a 22% bump from the hospitals at the top.

An even more dramatic difference cropped up in the analysis for bypass graft surgery. The top quartile in terms of adherence to best practices averaged just over $30,000 in expenses for each bypass operation compared to more than $41,500 for those operating in the lower half of the performance grid – a boost in cost of roughly 38%.

Extrapolation is a dangerous science, but Norling opted to make use of a projection all the same. The numbers indicated that improving care for bypass surgery alone across the U.S. could eliminate almost 3,500 “avoidable deaths” annually. And reduction of complications from both bypass surgery and pneumonia treatment could total 5,950. The reduced number of readmissions across the U.S. for both conditions would be more than 5,800.

The most eye-popping numbers from an economist's point of view, however, were those for patient hospital-days and raw cost.

According to Norling, improved care for bypass and pneumonia alone could cut the number of hospital days by about 470,000 a year, and bringing all care up to these standards produces more than $925 million in total annual savings.

Norling offered a cautionary note, however, pointing out that much of the physician and nurse cohort was made up of baby boomers and that the mindset needed to sustain these improvements must be transmitted across time and place.

“Knowledge transfer is institutionalized and continuous” in a system that sustains such improvements, he said.

Disease management companies might want to make note of these developments. If Norling's view proves out, “paying disease management companies to manage hospitals and doctors is an extra, unnecessary step.”

Hunter Kome, Premier's vice president for communications and public relations, said that the study did not draw data on the financial condition of the participating hospitals, so there is no way at present to establish whether financial health affects a hospital's ability to put P4P measures in place.

However, he said that “what we're seeing is that costs go down as patients receive more of the recommended care.” Premier is of the opinion that each of the participating hospitals operates on a not-for-profit basis.

Healthcare researchers have often cited geographic differences in care delivery, but that concern may be out the window by the end of the CMS/Premier study. Kome said that “We have not seen significant variation by region.”

The study does not capture the amount of time physicians spend with their patients at hospitals, but Kome stated that none of the measures require more time from doctors. “Most of the measures tracked in this project can be implemented by hospital staff.”

The implication is that nurses may end up with additional duties, at least as such programs start out. In this assumption, the lower rate of readmissions and complications might make up the loss of time on the back end, so to speak.

However, Kome stated that those services do not constitute an “extra” burden. Whether nurses in the real world would agree with him is unknown.

The casual observer might be inclined to ask whether the so-called Hawthorne effect might be responsible for the improvement in care – produced when an individual or group feels that it is receiving positive attention.

Kome admitted that “recognition for top performers” is part of the P4P pilot, but he said that a number of other factors are also at play. Among these are “incentive payments . . . the sense of competition inherent among participating hospitals and so on.”

He added: “The issue is whether the factors at play in the project appear to be driving improved performance, and they do.”