Transformation of the Health Care Industry: Curb Your Enthusiasm?

Burns, Lawton R.; Pauly, Mark V.

doi:10.1111/1468-0009.12312

Cited by 66 publications

(68 citation statements)

References 107 publications

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“…For example, a recent descriptive study by Burns and Pauly (2018) found that efforts to create financial incentives and efforts to create new provider organizations (such as alternative payment models, accountable care organizations, and patientcentered medical homes) have had a weak impact on quality and cost. For example, a recent descriptive study by Burns and Pauly (2018) found that efforts to create financial incentives and efforts to create new provider organizations (such as alternative payment models, accountable care organizations, and patientcentered medical homes) have had a weak impact on quality and cost.…”

Section: Limitations and Future Research Directionsmentioning

confidence: 99%

Impact of the value‐based purchasing program on hospital operations outcomes: An econometric analysis

Lee

Venkataraman

Heim

et al. 2019

J of Ops Management

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The Hospital Value‐Based Purchasing (VBP) Program, one of several federal regulations mandated by the Patient Protection and Affordable Care Act, uses Medicare provider payment penalties and bonuses to encourage hospital administrators to improve performance in four domains: clinical processes, patient outcomes, patient experiences, and efficiency. Before VBP's launch, some practitioners claimed VBP would have little impact, while others feared well‐off hospitals would be unfairly rewarded at the expense of previously poor‐performing hospitals. We examine whether and how the VBP penalties affect aggregate operating outcomes of healthcare providers in hospitals. Using secondary data, we find empirical evidence that hospitals with prior‐year VBP penalties exhibit positive associations between the penalty magnitude and certain current‐year care process improvements. Over the prior year, penalized hospitals also tend to exhibit increased patient case mix metrics, which should enhance revenue as a spillover effect. In a post hoc analysis, we observe that bonus‐receiving hospitals are less apt to exhibit subsequent performance improvements for these same metrics. Our contributions result from theoretically framing differences in hospital operating activities when facing the VBP Program's penalties as well as empirically demonstrating consequences of the penalty's magnitude.

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Section: Limitations and Future Research Directionsmentioning

confidence: 99%

Impact of the value‐based purchasing program on hospital operations outcomes: An econometric analysis

Lee

Venkataraman

Heim

et al. 2019

J of Ops Management

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“…Similarly, the simplest alternative explanation for the long absence of large multispecialty groups is that economies of scale and scope in the delivery of physician services are modest (Goldsmith et al., ; Burns and Pauly, ). However, this explanation is hard to square with the observation that such groups have managed to thrive in some local markets, but not others .…”

Section: Introductionmentioning

confidence: 99%

“…Medical care in the United States has been historically delivered by practitioners operating out of their own offices or as attendings in hospitals (Starr, ; Robinson, ), and although it still commonly is (Burns, Goldsmith, and Sen, ; Baker, Bundorf, and Royalty, ), a rapidly growing percentage of physicians are operating in large groups organized by nonphysician owners (see Burns and Pauly, , for a review of physician models of practice organization).…”

mentioning

confidence: 99%

“…Burns, Goldsmith, and Sen () and Burns and Pauly () argue that the long persistence of small group practices is due to the limited scale and scope economies in physician practices. Our model highlights a different explanation: the complementarities between investments in care coordination and organizational form.…”

mentioning

confidence: 99%

“…For a qualitative discussion of the varying regional fortunes of multispecialty groups, see Goldsmith and Burns () and Burns and Pauly (). For a map of regional variation in the presence of large medical groups, see Welch et al.…”

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confidence: 99%

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Sticking points: common‐agency problems and contracting in the US healthcare system

Frandsen

Powell²,

Rebitzer

2019

The RAND J of Economics

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We propose a “common‐agency” model for explaining inefficient contracting in the US healthcare system. Common‐agency problems arise when multiple payers seek to motivate a provider to invest in improved care coordination. We highlight the possibility of “sticking points,” that is, Pareto‐dominated equilibria in which payers coordinate around contracts which give weak incentives to the provider. Sticking points rationalize three hard‐to‐explain features of the US healthcare system: widespread fee‐for‐service arrangements; problematic care coordination; and the historical reliance on single‐specialty practices to deliver care. The model also analyzes the effects of policies promoting more efficient contracting between payers and providers.

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Physician Compensation Arrangements and Financial Performance Incentives in US Health Systems

et al. 2022

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IMPORTANCE Public and private payers continue to expand use of alternative payment models, aiming to use value-based payment to affect the care delivery of their contracted health system partners. In parallel, health systems and their employment of physicians continue to grow. However, the degree to which health system physician compensation reflects an orientation toward value, rather than volume, is unknown. OBJECTIVE To characterize primary care physician (PCP) and specialist compensation arrangements among US health system-affiliated physician organizations (POs) and measure the portion of total physician compensation based on quality and cost performance. DESIGN, SETTING, AND PARTICIPANTSThis study was a cross-sectional mixed-methods analysis of in-depth multimodal data (compensation document review, interviews with 40 PO leaders, and surveys conducted between November 2017 and July 2019) from 31 POs affiliated with 22 purposefully selected health systems in 4 states. Data were analyzed from June 2019 to September 2020. MAIN OUTCOMES AND MEASURESThe frequency of PCP and specialist compensation types and the percentage of compensation when included, including base compensation incentives, quality and cost performance incentives, and other financial incentives. The top 3 actions physicians could take to increase their compensation. The association between POs' percentage of revenue from fee-for-service and their physicians' volume-based compensation percentage. RESULTSVolume-based compensation was the most common base compensation incentive component for PCPs (26 POs [83.9%]; mean, 68.2% of compensation; median, 81.4%; range, 5.0%-100.0% when included) and specialists (29 POs [93.3%]; mean, 73.7% of compensation; median, 90.5%; range, 2.5%-100.0% when included). While quality and cost performance incentives were common (included by 83.9%-56.7% of POs for PCPs and specialists, respectively), the percentage of compensation based on quality and cost performance was modest (mean, 9.0% [median, 8.3%; range, 1.0%-25.0%] for PCPs and 5.3% [median, 4.5%; range, 0.5%-16.0%] for specialists when included). Increasing the volume of services was the most commonly cited action for physicians to increase compensation, reported as the top action by 22 POs (70.0%) for PCPs and specialists. We observed a very weak, nonsignificant association between the percentage of revenue of POs from fee for service and the PCP and specialist volume-based compensation percentage (r = 0.08; P = .78 and r = −0.04; P = .89, respectively). CONCLUSIONS AND RELEVANCEThe results of this cross-sectional study suggest that PCPs and specialists despite receiving value-based reimbursement incentives from payers, the compensation (continued) Key Points Question Do health system physician compensation arrangements primarily incentivize volume or value? Findings This cross-sectional mixedmethods study of 31 physician organizations affiliated with 22 US health systems found that volume was a component of primary care and specialist compensation for most P...

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Transformation of the Health Care Industry: Curb Your Enthusiasm?

Abstract: We need to be patient in expecting system improvements from ongoing changes in provider payment and organization. We also may need to look for improvements in other areas of the economy or to accept and accommodate prospects of modest improvements over time.

Cited by 66 publications

References 107 publications

Impact of the value‐based purchasing program on hospital operations outcomes: An econometric analysis

Impact of the value‐based purchasing program on hospital operations outcomes: An econometric analysis

Sticking points: common‐agency problems and contracting in the US healthcare system

Physician Compensation Arrangements and Financial Performance Incentives in US Health Systems

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