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American Journal of Gastroenterology


C 2006 by Am. Coll. of Gastroenterology
Published by Blackwell Publishing

ISSN 0002-9270
doi: 10.1111/j.1572-0241.2006.00805.x

REFLECTIONS ON MEDICAL PRACTICE

Pay-for-Performance MedicineQuality or Quagmire?

Michael Kirsch, M.D.
Center for Digestive Health, Willoughby, Ohio

(Am J Gastroenterol 2006;101:24532455)

When I take my dented car to the body shop, I pay the

bill after the repair has been properly performed. When my
trousers need to be altered, I pay the tailor after a satisfactory
completion of the task. When I hire a subterranean specialist to fix my basement leak, I pay when the only moisture
remaining is my sweat when he hands me the bill. In these
instances, payment is expected only if the intended outcome
has been achieved.

DIFFERENT COMPENSATION STRATEGIES

In other examples, we pay for an experience, not an outcome.
Symphony orchestras, for example, charge us even if the concerto is lifeless. Professional sports organizations keep our
money even if our team loses. Movie theaters make the same
profit even if the film is dull. Performance in these examples
is promised but satisfaction is not guaranteed.
Other services and professions are compensated for their
time and advice, not for a specific outcome or an entertaining
experience. Accountants get paid even if their clients taxes
increase. Financial advisors and other business consultants
are rewarded even if their advice is wrong. College admission
coaches and tutors are paid even if the student never reaches
the Ivy League.
Traditionally, physicians have been paid under this latter
construct. Primary care physicians, for example, are compensated for their time and expertise in treating patients with back
pain, depression, and fibromyalgia even if these conditions
persist or worsen. Cardiologists are paid to care for patients
with coronary artery disease even if myocardial infarctions or
congestive heart failure ensue. Gastroenterologists are paid
to evaluate patients with abdominal pain and nausea, not to
eliminate their symptoms. Physicians sell advice and time,
not cures or outcomes.

IS COMPENSATION REFORM NECESSARY?

Many reformists argue that the current physician compensation method penalizes conscientiousness and rewards mediocrity. Consider a few hypothetical examples. A surgeon
performs an uncomplicated cholecystectomy and is paid accordingly. Another surgeon performs the same operation on
an identical patient. Here, the common bile duct is misiden-

tified and transected. Complications develop and the patient

requires intensive medical treatment and additional surgery.
This surgeon will earn considerably more than his more successful colleague despite having provided inferior care. Similarly, a doctor will earn more money if his diabetic patients are
not well treated and require more office visits and hospitalizations. If a gastroenterologist takes twice the time necessary to
diagnose a patient with Crohns disease, then he earns more
by delivering less.
The inherent conflicts between patients and physicians legitimately clamor for scrutiny and correction. The current
compensation formula appears designed to enrich doctors at
patients expense. Who wants to defend a system that increases our earnings when our patients do worse?
Pay-for-performance gains currency when flagrant flaws
are highlighted to an increasingly cynical public. However, is
our compensation system so flawed that we should welcome
pay-for-performance with its deficiencies to serve the greater
good?
Many physicians advocate for maintaining the current
compensation structure. They argue that their professionalism and integrity are adequate firewalls to preserve unfettered
patient advocacy. This idealistic view is not realistic. We all
should recognizeand have read repeatedly in the press and
medical journalsthat physicians behaviors are influenced
by marketplace pressures. Pay-for-performance is designed
to align our patients interests and our financial incentives in
parallel.
Would pay-for-performance truly improve medical care or
simply exchange new conflicts and absurdities with existing
ones? Why are many physicians and professional societies
all of whom advocate practicing evidenced-based medicine
resisting this concept? Why are insurance companies championing this effort? Will physician-dissenters from this reform effort be labeled as self-serving partisans who are protecting their incomes more than their patients? How should
physicians navigate through this political minefield where all
of the players have conflicting agendas?
Pay-for-performance programs are proliferating across the
country. Tens of millions of Americans are now covered
by health plans that offer pay-for-performance programs
to physicians (1). The Centers for Medicine and Medicaid
Services (CMS) are now studying pay-for-performance in
physician practices, hospitals, and nursing homes. These

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Kirsch

pilot studies are likely the initial phasing-in of pay-forperformance across the medical landscape, rather than actual
experiments to test the concepts validity. Insurance companies and managed care organizations are pursuing this
new compensation initiative enthusiastically because pay-forperformance promises cost reduction and enhanced profits,
the corporate mission of these organizations.

BENEFITS OF PAY-FOR-PERFORMANCE
Pay-for-performance proponents have seductive arguments.
They claim that a strategy that rewards physicians for achieving desired outcomes will improve medical quality. Their system would pay to prevent strokes, gastrointestinal bleeding,
and cancer, not just to treat these conditions. Physicians would
earn more if their cohort of patients had lower hemoglobin
A1c and cholesterol levels. Doctors would be more motivated to ensure that their patients receive recommended vaccines, bone density determinations, and other preventative
measures. Screening colonoscopy and mammography usage
rates would rise. Physicians would have an added incentive
to treat patients with chronic conditions according to the best
medical evidence, not by anecdote or personal habit. Nursing home and hospitalized patients would benefit if these
institutions were rewarded for reducing the development of
decubitus ulcers, malnutrition, and Clostridium difficile infection.
In addition, pay-for-performance supporters claim it will
improve languid bedside manners. Why shouldnt patient satisfaction be a meaningful physician compensation variable?
Dont we review our employees performances to determine
salary adjustments? If our incomes were affected by our patients reviews of us, then our service would likely improve.
Pay-for-performance advocates point out that the marketplace has not solved patients frustrations of habitually late
doctors, rushed office visits, delayed appointment access, and
inadequate communication.
Finally, pay-for-performance would reinvigorate the
doctor-patient relationship by minimizing thorny financial
conflicts. Patients would enjoy enhanced trust and confidence
knowing that our incomes are now linked to their health and
not to their diseases.

RISKS OF PAY-FOR-PERFORMANCE
Although pay-for-performance offers the irresistible combination of better quality medical care at reduced cost, I view
its promises with wary skepticism. In addition, I fear that
the forces promulgating it will stifle rational debate over its
merits and deficiencies. Moreover, like prior reforms that
our profession has endured, it will be impossible to reverse
course once it has been implemented.
Pay-for-performances polished veneer camouflages numerous defects and deceptions. To begin, I am concerned
over the ultimate use of the data collected. I do not trust
that the government and the insurance industry support pay-

for-performance primarily as a quality initiative. I suspect

this effort will become a weapon for cost shifting and revenue restraint. Paying physicians less, however, would not
make patients better. Pay-for-performance is an exponential
extrapolation of the current practice of insurance companies
determining how many hospital days are adequate after a
colon resection or pneumonia. It would further cede clinical control away from physicians who would be aiming for
outcome targets designed in corporate boardrooms. Pay-forperformance sings about quality, but it sure smells like cost
control and micromanaged care.
How valid would the data be? If a physicians cohort of patients has a low rate of Pap smears, for example, then would
the doctor be penalized if his patients were noncompliant?
Would physicians or hospitals be held accountable for variations that are beyond their control? Are we penalized if the
designated quality goal is not medically appropriate or is rejected by a specific patient? What recourse would we have
for challenging erroneous data? I dread the thought of trying
to modify my quality rating considering the torture and time
we all endure just appealing nonformulary medication use.
Would the designated outcome reflect true medical quality?
How would colonoscopy, for example, be rated? Would insurance carriers measure cecal intubation rates or track the number and size of removed polyps? Would they monitor polyp
surveillance intervals? Would they tally procedural complications? Would they survey patients comfort? Would they
request physician documentation for review? Would a gastroenterologist be rewarded for good performance if the
procedure was not really necessary?
Who would compile the data? While some of this would
be assembled by insurance carriers, a considerable portion
would have to be tallied by physicians. This would require
that physicians offices have computerized medical records
with sophisticated software. Clearly, this would discriminate
against smaller practices that cannot support this added expense. Would these groups, already struggling to survive, be
penalized because they could not pay to play? Would the
modest compensation bonus justify the hassle and administrative expense? Large multispecialty groups, in contrast, are
already prepared electronically and philosophically to measure performance outcomes.
Payers would arrogate a major role in determining clinical
outcomes for physicians and in-patient facilities. Although
physicians will be asked to participate in this reengineering effort, they will not have the dominant role that they, as
medical professionals, should. Whom should we trust more
to determine medical quality measurements, physicians or
profit-seekers?
Physicians and hospitals would be assigned individualized
quality scores of questionable validity. A preferred provider
may not really be a preferable physician. These ratings would
be reviewed by the public, insurance companies, credentialing committees, and malpractice attorneys who would rely
on these putative quality assessments. High quality medicine
would be defined as meeting insurance company and government designed outcomes, a spurious assumption.

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Pay-for-Performance Medicine

While I expect insurance companies to measure and quantify everything they touch, medicine the art cannot be assessed rigidly and quantitatively. In an analogy, we can easily
and reproducibly measure the dimensions of a painting, but
there is no formula to distinguish a masterpiece from ordinary
art. We should counsel against relying on outcomes as quality
surrogates simply because they are measurable. Moreover, if
we agree that these parameters are not optimal quality indicators, then why should we endorse a new compensation
strategy that favors them?
Pay-for-performance will divide the medical community.
Physicians would compete for bonus payments as the new
system would be a zero sum game. If endocrinologists were
rewarded for providing stellar glycemic management, then
other physicians would have to subsidize their success. Does
anyone believe that every doctor would get a raise if each of
them met performance standards? Primary-care physicians,
who view themselves as under-compensated, are more receptive toward pay-for-performance than are surgical subspecialists because the former hope for income redistribution from
the latter. Pay-for-performance would be a potent internecine
stimulant.
Pay-for-performance would also create new conflicts between physicians and patients. Doctors might treat patients
with assigned performance goals preferentially. For example, if pay-for-performance rewards outcomes for hypertensive patients but not for asthmatics, then might the former
patients receive more attentive care? Is this potential conflict
less offensive than the financial misalignment that invited
pay-for-performance?
Pay-for-performance would further erode our professionalism. The patient is no longer our focus, the outcome is.
GERD patients would now be viewed by practitioners and
payers in terms of weekly heartburn episodes, dysphagia occurrences, and dilation necessity. Each patient becomes a
ladder of outcomes that pays us each time we ascend another
rung. This approaches a commission schedule that salesmen
use when they exceed designated targets.
When patients are dehumanized as potential outcomes, the
doctor-patient relationship suffers. Pay-for-performance distracts us from a holistic approach and facilitates our viewing patients as lab results and other objective measurements.
Pay-for-performance would shift us away from the patient as
a human being as we pursue assigned benchmarks instead.

PASSIVE OBSERVATION OR ACTIVE PARTICIPATION?

We must be circumspect how we approach this sensitive
issue. Are we politically deft enough to challenge pay-forperformance while still maintaining that medical quality is
paramount? Can our profession credibly advise the public on
pay-for-performance when different medical specialties are
on both sides of this issue?
Skeptical physicians and medical societies should not
bluntly oppose pay-for-performance but agree with its
premise for quality enhancement. Let us explain, however,

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how we can make pay-for-performance even better rather

than clumsily reject it outright. We need to be viewed by the
public as their stalwart ally and protector as we were when
we lobbied for tort reform. If we permit ourselves to become
demonized as a self-serving special interest group, then we
will have marginalized our role.
A review of recent history highlights the risks of remaining passive. Years ago, managed care was heralded as an antidote to exploding costs and erratic quality. HMOs emerged
and prospered because our predecessors did not control the
professions excesses. This allowed others to seize the reform
effort and ultimate control. We are in a similar position today. If we do not put our patients first, then someone else will
do it for us. It is essential that physicians participate in payfor-performance discussions so that our expertise can shape
the process and the product. Wisely, the American College
of Physicians, the American Medical Association, the American Academy of Family Physicians, the American Geriatric
Society, and others are participants and not spectators. The
American College of Gastroenterology and the American Society for Gastrointestinal Endoscopy have just published the
results of a joint task force detailing quality indicators for
various endoscopic procedures (2, 3). These societies recognize that we must unify and become proactively involved
rather than protest later once pay-for-performance has gained
irreversible momentum.
Although it seems impossible that there can be consensus among various medical specialties, the federal government, Congress, and insurance carriers, some form of payfor-performance will ultimately emerge. The sooner physicians enter the arena, the better we can protect our profession
and our patients. Though our clout is limited, we can still
make a difference.
Fundamentally, I believe that physician compensation
should be linked to quality. The fiduciary concept of payfor-performance is appealing, but consideration of the details
shows that the cure may be worse than the illness. Pay-forperformance is a slogan, which obscures a rough interior. We
need to expose its core.
Slogans can be intoxicating, but we must stay sober so that
we can assure that evidence-based medicine becomes our
outcome standard. This is performance that is really worth
paying for.
Reprint requests and correspondence: Michael Kirsch, M.D.,
Center for Digestive Health, 34940 Ridge Road, Willoughby, OH
44094.

REFERENCES
1. Shaw G. Pay for performance in your future? Plan on it, expert
says. ACP Observer, December 2005.
2. Bjorkman DJ, Popp JW. Measuring the quality of endoscopy.
Am J Gastroenterol 2006;101:8645.
3. Faigel DO, Pike IM, Baron,TH, et al. Quality indicators for
gastrointestinal endoscopic procedures: An introduction. Am
J Gastroenterol 2006;101:86672.