U.S. hospitals quality initiatives lack financial incentives

The head of the primary lobby for for-profit hospitals says that quality measures are sorely needed to improve patient care, but that some of the current initiatives lack both the appropriate focus and financial incentives.

Writing in the most current edition of the journal Health Affairs, Charles "Chip" Kahn, executive director of the Federation of American Hospital Systems, critiqued the programs developed under the Affordable Care Act (ACA) as sometimes redundant and costly to deploy. Meanwhile a study that accompanied the article noted that the financial rewards and penalties that underlie the programs are modest at best.

In the article, Kahn praised some of the quality initiatives that have been developed under the ACA, particularly the Hospital Readmissions Reduction Program, the Value-Based Purchasing (VBP) Program, and the Hospital-Acquired Condition (HAC) Reduction Program. But he also pointed out significant flaws, which included the "redundancy and relevance of measures that are used in both the VBP and HAC programs; the arbitrary, musical chairs-like HAC penalty that punishes a quarter of all hospitals every year regardless of how well those institutions have improved, or even potentially of how well they actually performed; and, the silence of the readmissions measure on the critical socio-economic factors, which studies show are likely to influence readmissions of low-income patients for reasons beyond the hospital's capacity to affect."

Regarding the VBP, Kahn co-authored a study in Health Affairs indicating that the financial impact of the program is likely negligble at best. For example, the mean bonus for a high performer in the program was just $73,000--about the salary for a single nurse. And 60 percent of the hospitals that receive rewards reaped less than $50,000 in bonus payments. Penalties also tended to be equally modest, suggesting that hospitals were not motivated to participate at a high level. The numbers were similar for the HAC and hospital readmission programs.

Kahn did note that the hospital sector has been more focused on quality than in the past, with the Institute of Medicine's report about deaths at hospitals 16 years ago serving as a wakeup call.

"The root notion underlying IOM's recommendations was that performance measurement and reporting of the results would fuel needed improvement. Much progress has been made since these troublesome reports," Kahn wrote. "However, to expand and sustain progress, efforts that have been taken by the public and private sectors need to be properly targeted and refined."

The U.S. healthcare system is having a reckoning of sorts regarding quality, given it is ranked near the bottom among industrial countries, while costing far more to deliver care.

The IOM may also play a new role in redeveloping quality metrics, particularly through its "Vital Signs" report released last spring, according to Kahn. The IOM concluded that the measures currently in place require as many as 100 full-time employees per healthcare system to implement and cost up to $12 million a year.

The report, Kahn said, "recommends a set of 'core metrics' (including measures such as life expectancy, patient safety, and healthy communities), which will provide an infrastructure that can be used to concentrate assessment on what is truly most essential for healthcare delivery."

To learn more:
- read the Health Affairs article 
- here's the Health Affairs study
- check out the IOM report

Suggested Articles

We take a look back at health insurers' financial performance, including soaring profits, in Q2.

Employment growth in the healthcare industry cooled off in July as the sector added fewer jobs than in June as COVID-19 continues to spread.

Employers are making adjustments to their health benefits in the wake of COVID-19, but workers may not take the time to consider these new options.