BJC HealthCare Drops United Healthcare Contract Over "Garbage In, Garbage Out" Pay for Performance Plan

The St. Louis Post-Dispatch reported that the area's largest hospital system, BJC HealthCare, is terminating its contract with the United Healthcare managed care organization because of objection's to United's new "pay for performance" program. This program is supposedly a response to "employers' frustration over the inconsistent cost and quality of health care in the face of rapidly rising costs." (Its another question whether a company like United is really focused on cutting costs, given that its CEO, William McGuire, made over $7.5 million in 2003, plus over $84 million profits realized on stock options, according to American Medical News.)
Be that as it may, hospital leaders suggested that United's methods for assessing performance amounted to "garbage in, garbage out." Problems with the plan included inability to determine which doctor of a multi-physician group should be linked to a particular patient's data, unavailability of any quality data for certain patient conditions (so that physicians who see patients with those conditions would only be rated on "efficiency,") failure to adjust outcomes data for differences across physicians in patients' characteristics, and over-emphasis of cost over quality data. So "pay for performance" here looks like it might just lead to perverse incentives.

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