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Employers Get a Grip

Philip Betbeze, for HealthLeaders Media, May 5, 2008

Despite the wailing about the decline in availability of employer-funded healthcare (down from 69% of employers in 2000 to 60% today), employers that remain in the healthcare business seem to suggest by their actions that they don't anticipate leaving that responsibility by the roadside anytime soon. With the recent announcement that Bridges to Excellence (BTE) will pay physicians big bonuses for their work in establishing a "medical home" for their employees, big business seems resigned to the fact that they must get their hands dirty in fixing healthcare quality with substantive pay-for-performance incentives. BTE, a coalition of large employers that includes IBM, General Electric, and Verizon Communications, will pay doctors a bonus of up to $125 per patient, to a maximum bonus of $100,000 a year, for adopting a measurable integrated approach to coordinating those patients' care. To get the biggest bonus, doctors will have to pay close attention to their patients and treat their patients using evidence-based medicine guidelines.

One big complaint about P4P until now has been the relatively piddling incentives offered by a variety of health plans that won't serve to move the needle on healthcare quality and efficiency for a variety of reasons: they're not big enough, the P4P programs are all over the map in what they measure, and the cost of complying with them is more than what physicians and healthcare facilities can recoup. Some early P4P programs offered bonuses of between 2% and 6% to meet certain quality goals. "Not enough," physicians and hospitals seemed to say. The ROI just wasn't there. Will this incentive be game-changing? Based on the amount of money at stake, it seems likely.

Aimed at primary care doctors, the new plan represents a real carrot to supplement the stick of declining reimbursements that's been beating physicians for years—and helps reverse the perverse procedure-based incentives that rule healthcare in the United States, conspiring to make it so unsustainably expensive. Research from BTE shows that the new approach will work nearly immediately to cut costs and improve quality. And laudably, rather than keeping the lion's share of the savings themselves, these companies are sharing the savings with the doctors themselves—the only way to ensure long-term success. Francois de Brantes, the head of BTE, says the cost savings show up in the first year, according to projections, making the business case for such relatively large payouts.

Will the program cure all of healthcare's cost unsustainability? No. No one program can do that. But it's a big step in the right direction.

In the 24-hour news cycle that dominates these days, this move may be quickly forgotten in the maelstrom of negative news about the future of employer-based healthcare, but my guess is we'll see real change by this time next year. Why?

Real incentives really work. Period.


Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at pbetbeze@healthleadersmedia.com.

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