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How do we incentivize innovative, patient-centered care?

For many years there has been criticism of physicians who racked up larger incomes because reimbursement has been based on volume (the number of visits and procedures) rather than value (whether patients got better).

In the US health care system, emerging payment and health care delivery models emphasize good outcomes. Outcomes tend to be measured based on the entire group of patients under the physician’s (or health system’s) care rather than what happens to an individual patient. But in a recent New York Times op-ed piece, “How Medical Care is Being Corrupted,” Drs. Pamela Hartzband and Jerome Groopman at Harvard Medical School stoked the fears of consumers by suggesting that measures used by regulators and insurers in these models were designed to “coerce” physicians into providing inappropriate care driven by evidence-based practice.1 Concern about new models is also something found in Deloitte’s 2014 Survey of US Physicians; most physicians (78 percent) prefer to stick with the traditional payment approaches.2

How many patients can I see today? How many knees can I replace in a week? How many stents can I insert this month? In general, the health care industry in the US seems to be taking baby steps in its evolution from traditional fee-for-service payments to more payments based on value. Today, physicians are sometimes judged by the ambiance of the waiting room instead of the quality of their work. Today, the traditional approach to reimbursement is doing little to reward good outcomes.

While I believe that hard work should be rewarded, I also believe the industry could do a better job of rewarding good outcomes. If a physician takes care of people with diabetes, it is reasonable that he or she be measured by how many of those patients have good control of their blood sugar as measured by a simple blood test. And physicians who care for women with breast cancer could be gauged by how often the patient receives the treatment that randomized studies demonstrate could be their best chance for a cure.

The best care may be based on the individual patients’ needs in the context of what is most likely to result in the best outcome. And many physicians agree: Deloitte’s 2014 Survey of U.S. Physicians found that seven out of 10 physicians acknowledge the importance of being capable of closely integrating clinical care, data analytics and consumer engagement to improve patient health.3

We know that a middle-aged man with high cholesterol and who is overweight, smokes and does not take low-dose aspirin has a far higher chance of having a heart attack than one who has a healthy weight and doesn’t smoke. I would argue that it’s not wrong to provide an incentive to motivate doctors and health systems to put in place approaches to care that lower the risk of heart attacks. Of course, I also believe that people are responsible for their good health. We are beginning to see health plans try new ways (e.g., lower insurance premiums for those who do not smoke) to financially incentivize people into changing their behavior.

Historically, physicians have not been held financially accountable for the health of their patients and outcomes of their treatments. I believe it is time to change that, but acknowledge that the devil is in the details.

Both the private sector – health providers and health plans – and the Centers for Medicare and Medicaid Services (CMS) are focused on those details. Across the industry, stakeholders are actively working to develop new approaches to rewarding physicians and health systems for care can enable good health for Americans.

Physicians are aware that the shift to value-based care is happening and inevitable. The physician respondents to the survey predicted that value-based payment models will equal about 50 percent of their total compensation in 10 years. But just as patients have needs and preferences about the physicians that care for them, physicians also have needs and preferences for how they practice medicine. And most of them have opinions about what skills they need to navigate in an industry based on value. Physicians were asked which skills they need to possess to successfully practice medicine in the future, and they reported the following as important:

Deloitte infographics

But most (78 percent) physicians remain concerned that value-based payment models may penalize them for factors out of their control and not capture quality improvements achieved outside of performance goals.4 To boost their comfort level and help ease the transition somewhat, physicians say they need expanded clinical support capabilities, comprehensive health IT, access to non-physician staff, managerial expertise, and business knowledge and possibly most importantly, fairly structured value-based payment models to support their participation in value-based care efforts.

Transparency is important but I suggest that stakeholders should consider focusing on better understanding which approaches result in the healthiest populations because the old model may not work much longer. Ultimately, incentivizing innovative, patient-centered care by providers and greater engagement by consumers could drive better health outcomes.

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1 Pamela Hartzband and Jerome Groopman, New York Times, “How Medical Care Is Being Corrupted,” November 18, 2014, http://www.nytimes.com/2014/11/19/opinion/how-medical-care-is-being-corrupted.html?smprod=nytcore-ipad&smid=nytcore-ipad-share&_r=0
2 The Deloitte 2014 Survey of U.S. Physicians, a nationally representative sample of the U.S. physician population, assesses value-based care (VBC), future of medicine, impact of health reform, and health information technology (HIT). Publications can be found at www.deloitte.com/centerforhealthsolutions
3 Physicians responding “very important”/”important” when asked which physician capabilities will be important in the next 1-3 years as the practice of medicine evolves.
4 Physicians responding “agree”/”strongly agree” when asked about risk-based compensation agreements.


Author bio

Dr. Mitch Morris is the Vice Chair and Global Leader for the Health Care Sector at Deloitte, including Consulting, Audit, Tax, and Financial Advisory Services. Dr. Morris has more than 30 years of health care experience in consulting, health care administration, research, technology, education, and clinical care. Earlier, he served as a Senior VP of health systems and CIO at MD Anderson Cancer Center where he was also Professor in Gynecologic Oncology and in Health Services Research.