What pay for performance can mean for quality managers

CEOs are paying more attention to public data

Make no mistake about it. Hospital CEOs are paying greater attention these days to the growing number of report cards and other publicly available comparable data that show where their facilities stand vis-à-vis the competition.

While quality managers no doubt welcome the higher profile this gives their area of expertise, it also requires them to learn all they can about the various organizations offering such comparisons, how they gather their data, what they do with them, and what such data really say about their performances.

"CEOs are nervous about this," asserts Patrice L. Spath, a consultant with Brown-Spath & Associates in Forest Grove, OR. "In the past, they have not paid much attention to publicly available data; but now, especially with pay-for-performance arrangements, [that information] can hurt them in the pocketbook."

Because of this concern, she continues, CEOs are anxious to see what the data look like before they hit the paper. "This puts more pressure on quality managers to have the information available in real time and also have a strategy for dealing with the data when they show you’re not as good as everybody else," Spath notes.

"In general, I think CEOs realize there’s a great deal of pressure from a number of entities to produce more information about what’s going on in hospitals," stresses Carey Vinson, MD, medical director for quality management at Pittsburgh-based insurer Highmark Inc., which was created in 1996 through the consolidation of Blue Cross of Western Pennsylvania and PA Blue Shield.

Vinson recommends that quality professionals be proactive when it comes to pay-for-performance arrangements.

However, he explains, their enthusiasm is restrained. "What I’ve discovered is that CEOs are not certain the data sources are accurate; they’re not certain the measures currently being looked at are the right way to determine the quality of service provided by the hospital," Vinson says.

"The concern is that by tying most of the measures to claims or various codings, you get a very limited viewpoint of what happens in a hospital. But there is a recognition that there’s more and more emphasis on reporting and/or pay for performance," he adds.

That, of course, is where the quality manager comes in, and this is all to the good, explains Judy Homa-Lowry, RN, MS, CPHQ, president of Homa-Lowry Healthcare Consulting in Meta-mora, MI.

"I think actually in terms of looking more at quality that it’s a good thing for quality professionals; it helps support more QI initiatives in the organization," she asserts.

"Now that JCAHO [The Joint Commission on Accreditation of Healthcare Organizations] and Medicare have joined forces and are looking at things more from a disease management perspective, it will give quality managers information that will allow them to identify clinical issues that may need intervention," Homa-Lowry adds.

Cutting through the clutter

With organizations such as the Centers for Medicare & Medicaid Services (CMS), JCAHO, The Leapfrog Group, HealthGrades, and the American Hospital Association (AHA) — not to mention numerous statewide organizations and insurance carriers — using comparative data for anything ranging from report cards for consumers to pay-for-performance arrangements, how is a quality manager supposed to cut through the clutter and make sense of it all?

"As far as good, valid, reliable comparative data, probably the ones run by the state associations and health departments are the best," Spath adds. (She has several links on her web site at www.brownspath.com.) "If your state has one, that’s probably where I’d go first."

Then there are those sponsored by organizations with sufficient "oomph" that hospitals may feel pressured to participate. For example, there is JCAHO’s ORYX initiative, or the AHA’s Quality Initiative. The latter, Spath notes, is voluntary, "but Medicare has said that if you don’t participate, you will get a cut in reimbursement."

She points out, however, that those are not clinical measures but patient satisfaction measures, important nonetheless. "Everybody seems to mention HealthGrades, too."

And of course, CMS has gotten into comparative data in a big way with its Premier pay-for-performance program, which focuses on 34 clinical quality measures.

Homa-Lowry says that, in general, the data are getting better, "and now that we have studies that have done comparisons, they will be more uniform across the country."

She contends the core measure data will be the most widely used, adding that, "Certain organizations may be participating in national databases around various specialties."

It also would be very helpful for quality professionals to know all the databases their organization is subscribing to, Homa-Lowry adds.

"Sometimes, they may not be aware of all the databases the hospitals subscribes to, yet they are the ones who will understand the data coming out of them. Then for each one in which they participate, make sure it truly examines best practices and not just a norm. Is the database small or large? Is each region appropriately represented? Also, you have to be aware of the severity of risk adjustment being used. See if, in fact, the methodology has been reviewed — and what the experts say about it. You should also be comfortable with the results themselves," she points out.

Don’t forget the public

The report cards directed at the public are no less important than those promulgated by health care associations. In fact, as one study shows, paying attention to them may not only help secure greater market share, but they actually can lead to improved quality.

That’s one of the major findings in a paper that appeared in the March/April 2003 issue of Health Affairs.1

"People are becoming more aware that there are real differences [between hospitals] and that their choices can make a real difference in their outcomes," says Judith H. Hibbard, MPH, DrPH, a professor in the department of planning, public policy & management, at the University of Oregon in Eugene, and lead author of the article.

Homa-Lowry agrees this makes the consumer a very important target. "Quality professionals really do need to be aware of what the consumer is receiving. So many report cards seem to be driven by other agencies that they need to be aware of what they measure and how — and how they obtained the data. These methodology and sampling comparisons should be shared with the CEO," she says.

In some ways, CEOs are more concerned with what the consumer sees than issues such as pay for performance, Vinson notes.

"[Pay for performance is] something they negotiate, and they decide if they are going to take what the payer wants to give them or not. But once the information becomes public knowledge, it’s outside of their control. Once it’s published, they’re concerned about how they are perceived by patients or other interested parties, and then there’s a worry about if the information is being interpreted correctly, and what’s being done with it," he explains.

So what do consumers look for in these report cards? Not core measures, according to Hibbard. "Consumers are not sure what [core measures] mean," she explains. "In our study, a lot of people made choices based on things like maternity — that’s an issue they were concerned about and understood, and had the opportunity to think about their choices."

Other consumer concerns include patient experience, and other cross-cutting issues such as infection rates, Hibbard says.

"What a person wants to know is, which are the better and which are the worst hospitals, and any cross-cutting issue will help them come to that conclusion because they can impact anyone who comes in the hospital," she explains.

"A large category might be preventable complications, mortality rates, medication errors — or any errors," Hibbard adds

Core measures "were not chosen with this end-user in mind," she insists. And length of stay is completely meaningless to average people. "This is an example of the meaningless measures that are out there," Hibbard says. "It’s the opposite message the report designer wants to give."

How the information is presented, disseminated, and framed affects the degree to which consumers pay attention, she continues. And what about hospital rankings, such as a top 100?

"Again, it depends on how the report is done," Hibbard observes. "But if a hospital is an overall high performer or low performer, it will pay attention, because all the work has been done for it. The consumer can’t say These are good data’ or These are bad data,’ but they can say, This hospital is the best in my community.’"

Whatever comparative data you use or pay attention to, you must avoid the temptation to rest on your laurels if you come out with a high ranking, Spath warns.

"The bigger concern is, are we satisfied if we are within two standard deviations of the mean, which is where JCAHO sets its standards?" she poses.

"For example, lets say comparative data for infections indicate the average is 3% to 5%; some hospitals can and have gotten down to 0%. These data can be based on peoples’ flawed systems. What we have is a rate that doesn’t necessarily reflect the best system; we can fall into the trap of being good enough and of not trying to get better. If you were a patient, would you be happy if you knew your hospital could get to 0% infections in central lines and didn’t try?" Spath asks.


1. Hibbard JH, Stockard J, Tusler M. Does publicizing hospital performance stimulate quality improvement efforts? Health Affairs 2003; 22( 2):84-94.

Need More Information?

For more information, contact:

• Judith H. Hibbard, MPH, DrPH, Professor, Department of Planning, Public Policy & Management, 1209 University of Oregon, Eugene, OR 97403-1209. Phone: (503) 233-2763. E-mail: jhibbard@uoregon.edu. Web: http://darkwing.uoregon.edu/~jhibbard.

• Judy Homa-Lowry, RN, MS, CPHQ, President, Homa-Lowry Healthcare Consulting, 560 W. Sutton Road, Metamora, MI 48455. Phone: (810) 245-1535. E-mail: homalowry@earthlink.net.

• Patrice L. Spath, Brown-Spath & Associates, P.O. Box 721, Forest Grove, OR 97116. Phone: (503) 357-9185. E-mail: Patrice@brownspath.com.

• Carey Vinson, MD, Medical Director for Quality Management, Highmark Inc., Pittsburgh. Phone: (412) 544-2809.