Health policy analyst Dr Lesley Russell has written an indepth analysis of the state of health reform in the US for the online publication, Inside Story.
In this piece for Croakey she writes about the lessons from the US in using financial incentives to improve hospital care:
“As Australia looks to improve the quality of health care delivered in hospitals and implement national reporting against a range of performance indicators to assess these improvements, a US pilot program provides some instructive insights into how such changes can work.
The Hospital Quality Incentive Demonstration (HQID) project, the first national project of its kind, was designed to determine if economic incentives to hospitals are effective at improving the quality of inpatient care.
There are 230 hospitals participating in the project, and they include small and large, urban and rural, teaching and non-teaching facilities. The participating hospitals volunteered to report their data for five high-volume inpatient conditions (acute myocardial infarction, coronary artery bypass graft, heart failure, pneumonia, hip and knee replacement ) using 30 agreed measures of quality care.
The data is publicly available, with hospitals clearly identified. Recently released analysis of the data shows that the hospitals involved have raised their overall quality by an average of 17.2 percent over four years.
The 1.5 million patients who were treated in the five clinical areas in this time received approximately 500,000 additional recommended evidence-based clinical quality measures, such as smoking cessation, discharge instructions and pneumococcal vaccination. These improvements saved the lives of an estimated 4,700 heart attack patients.
On the basis of the annually reported data, hospitals receive cash incentives from Medicare, the government insurance program for the elderly and disabled. This year 225 hospitals will divide $12 million in bonuses and three poor performers will be penalised.
The lesson is that financial incentives can increase quality of care and that these improvements can be made in a relatively short period of time.
However there are costs involved, and some perverse incentives that can hinder such an approach. For example, one hospital spent funds to hire 1 1/2 full-time-equivalent nurses to track quality data and to purchase new beds that helped reduce infections. Its success in keeping heart-failure patients from returning to the hospital - readmission rates dropped 37% over three years – actually cost the hospital money because fewer admissions meant less reimbursement from Medicare.”
• Lesley Russell is the Menzies Foundation Fellow at the Menzies Centre for Health Policy at the University of Sydney and the Australian National University, and a Research Associate at the US Studies Centre, University of Sydney. She is currently a Visiting Fellow at the Center for American Progress in Washington DC.
