Predictive Analytics Can Help Correct the Fundamental Economic Misalignment of Payment Systems.
The recent article cited in the British Medical Journal entitled "The
Effect of pay-for-performance on management and outcomes of
hypertension...." Highlights the limits of an incentives based solution to
the healthcare dilemma faced by the entire world. It is not a lack of
incentives or compensation, but a fundamental economic misalignment of
payment.
We at the Western Clinician's Network (a non-profit organization) are
pursuing research to understand the essential improvements in the
compensation relationship that will allow for pure pay-for-performance. It
is only through this type of revolutionary approach that we can unleash
the ingenuity, and resourcefulness that serves free markets all over the
world. The challenge is in establishing a method of estimating the
relative difficulty of aiding patients to a measurably healthier future.
The BMJ article concludes that the reason no significant improvements
in the measures are discovered was because the "study suggests that care
for hypertension in the United Kingdom was already close (or along the
way) to reaching the threshold required to achieve maximum payments set in
the pay for performance policy " and "The setting of the indicator
thresholds for maximum payment close to prevailing practice may have
provided little incentive for further improvement. Thus, pay for
performance may have simply supported existing practice for hypertension."
We have found in our research at the WCN that this is indeed the case, but
perhaps even more enlightening is our finding that those that can and will
easily change their medical course are already on their way. Those that
require greater levels of intervention or assistance will not be addressed
until the economic drivers are properly aligned. We believe this can only
happen through the equivalent of an economic revolution.
The first step required to achieve this revolution is to create a
meaningful picture that both provider and patients can easily grasp and
use as a guide. So called quality and outcome measures are highly complex
pictures of the adequacy of care, and have little direct impact on
provider or patient behaviors. In two pilot studies we have used a simple
predictive analysis, using the Framingham Risk Calculator which is
publicly available, to consolidate abstract measures into a simple
statement of the probability of a cardiovascular event in the coming 10
years. A more sophisticated resource is available through Archimedes
Indigo product and has been shown in their research to significantly
improve patient compliance with treatment interventions. These and other
innovations cannot currently be incorporated in primary care practices
because there is no economic model that allows their purchase and support.
This would not be the case if providers were paid for measureable
improvements in the health of the individual
The next essential component of compensation redesigned to pay for
measureable improvements in health of patients is to estimate the
probability that a person will choose a healthier future.
When the insurance and HMO industries consider this from their perspective
it equates to a loss avoidance plan and so the patients are "risk
stratified" as an estimate of the likely medical costs to come in the
manageable future. This however continues to force the medical profession
into a cost containment mentality that is at ethical and practical odds
with the profession. Aligning compensation with the ethical roots of
medicine however is now possible.
The probability that a person will choose a healthier future is
dependent on a variety of factors. In order to define the probability of a
person choosing a healthier future, we are seeking correlations within the
demographic and economic measures readily available in electronic health
records and billing data. While these factors may suggest a probability of
a person being able to choose and execute the behaviors required to
realize a healthier future they do not expressly say anything about the
individual. In fact the laws of probability very explicitly exclude this
type of conclusion. The estimation does however allow for a more accurate
means of estimating those demographic and economic factors which will lead
to success in a therapeutic relationship.
Let's imagine that we now have a means of accurately predicting who
will be able to not only choose, but also execute a plan for a healthier
future. This then becomes the last essential component required to
redefine compensation for healthcare: payment for measureable improvements
in outcomes. We will then see compensation go up proportionately for those
patients who require greater assistance to realize that healthier future.
This also frees the provider of an encounters based financial model and
encourages the incorporation of a wider array of resources to achieve this
end, many of which are still being invented. The economy now turns on the
same drivers of performance that the clothing industry (or any number of
other vendors in the free market) does, and produces a higher quality
product at decreasing costs. The need for micro regulatory dabbling is
also altered, since it is in the end a payment for improved health with a
known and visible outcome: decreasing risks of disease and the concomitant
costs and pain and suffering.
Rapid Response:
Predictive Analytics Can Help Correct the Fundamental Economic Misalignment of Payment Systems.
The recent article cited in the British Medical Journal entitled "The
Effect of pay-for-performance on management and outcomes of
hypertension...." Highlights the limits of an incentives based solution to
the healthcare dilemma faced by the entire world. It is not a lack of
incentives or compensation, but a fundamental economic misalignment of
payment.
We at the Western Clinician's Network (a non-profit organization) are
pursuing research to understand the essential improvements in the
compensation relationship that will allow for pure pay-for-performance. It
is only through this type of revolutionary approach that we can unleash
the ingenuity, and resourcefulness that serves free markets all over the
world. The challenge is in establishing a method of estimating the
relative difficulty of aiding patients to a measurably healthier future.
The BMJ article concludes that the reason no significant improvements
in the measures are discovered was because the "study suggests that care
for hypertension in the United Kingdom was already close (or along the
way) to reaching the threshold required to achieve maximum payments set in
the pay for performance policy " and "The setting of the indicator
thresholds for maximum payment close to prevailing practice may have
provided little incentive for further improvement. Thus, pay for
performance may have simply supported existing practice for hypertension."
We have found in our research at the WCN that this is indeed the case, but
perhaps even more enlightening is our finding that those that can and will
easily change their medical course are already on their way. Those that
require greater levels of intervention or assistance will not be addressed
until the economic drivers are properly aligned. We believe this can only
happen through the equivalent of an economic revolution.
The first step required to achieve this revolution is to create a
meaningful picture that both provider and patients can easily grasp and
use as a guide. So called quality and outcome measures are highly complex
pictures of the adequacy of care, and have little direct impact on
provider or patient behaviors. In two pilot studies we have used a simple
predictive analysis, using the Framingham Risk Calculator which is
publicly available, to consolidate abstract measures into a simple
statement of the probability of a cardiovascular event in the coming 10
years. A more sophisticated resource is available through Archimedes
Indigo product and has been shown in their research to significantly
improve patient compliance with treatment interventions. These and other
innovations cannot currently be incorporated in primary care practices
because there is no economic model that allows their purchase and support.
This would not be the case if providers were paid for measureable
improvements in the health of the individual
The next essential component of compensation redesigned to pay for
measureable improvements in health of patients is to estimate the
probability that a person will choose a healthier future.
When the insurance and HMO industries consider this from their perspective
it equates to a loss avoidance plan and so the patients are "risk
stratified" as an estimate of the likely medical costs to come in the
manageable future. This however continues to force the medical profession
into a cost containment mentality that is at ethical and practical odds
with the profession. Aligning compensation with the ethical roots of
medicine however is now possible.
The probability that a person will choose a healthier future is
dependent on a variety of factors. In order to define the probability of a
person choosing a healthier future, we are seeking correlations within the
demographic and economic measures readily available in electronic health
records and billing data. While these factors may suggest a probability of
a person being able to choose and execute the behaviors required to
realize a healthier future they do not expressly say anything about the
individual. In fact the laws of probability very explicitly exclude this
type of conclusion. The estimation does however allow for a more accurate
means of estimating those demographic and economic factors which will lead
to success in a therapeutic relationship.
Let's imagine that we now have a means of accurately predicting who
will be able to not only choose, but also execute a plan for a healthier
future. This then becomes the last essential component required to
redefine compensation for healthcare: payment for measureable improvements
in outcomes. We will then see compensation go up proportionately for those
patients who require greater assistance to realize that healthier future.
This also frees the provider of an encounters based financial model and
encourages the incorporation of a wider array of resources to achieve this
end, many of which are still being invented. The economy now turns on the
same drivers of performance that the clothing industry (or any number of
other vendors in the free market) does, and produces a higher quality
product at decreasing costs. The need for micro regulatory dabbling is
also altered, since it is in the end a payment for improved health with a
known and visible outcome: decreasing risks of disease and the concomitant
costs and pain and suffering.
# # #
Carl Heard, MD, MMM
Carson City, NV 89703
carlheard@carlheard.com
Competing interests: No competing interests