For years health service researchers have known that there's tremendous practice variation across the nation, that medical errors are ever-present and that optimal clinical processes are rarely followed. Fee-for-service medicine and the current Medicare case-rate payment system have been a primary cause of these problems, as they reward over-use and rework. An unwanted consequence of that is lower quality care. But how can we change the system?
Capitation and managed care in the 1990s didn't solve the problem. The latest candidate solution is pay-for-performance (P4P). P4P has made a good initial start in California, Massachusetts and elsewhere, and Medicare is very interested indeed in adopting it. But it remains a nascent movement that has many struggles to overcome before it becomes mainstream. P4P requires transparency, greater use of IT and the buy-in of the medical profession. Even then it's unclear as to whether P4P can actually save money while it improves care, partly because underutilization may be as common as overutilization. And it doesn't touch the problem of uninsurance and unequal access to care. - Matthew