Will Pay-For-Performance Cure Our Medical System?

TheStreet.com

NEW YORK (MainStreet)—If the results of a new medical care model in Rwanda translate to the United States under the Affordable Care Act's Accountable Care Organization pay-for-performance incentive initiative, the government may see some savings and Medicare patients may receive somewhat better care as measured by outcomes.

Also see: Affordable Care Act Rate Shock

Medical care providers in most countries "deliver a quality of care that is below their capabilities and training," according to Paul Gertler, who is the director of the UC Berkeley Clausen Center for International Business and Policy. Gertler, in conjunction with the national government of Rwanda, evaluated a new pay-for-performance (P4P) model for the healthcare industry. The model was designed specifically to increase access to high-quality health care for mothers and children.

In a randomized control trial, Gertler found that providers who were offered financial incentives had a 30% increase in complying with clinical care guidelines and a 20% increase in productivity. These improvements translated into improved health for children as measured by increased height and weight.

Also see: Big Worries Over Health Care, Same Old Rises in Payments

However, the results may not be as impressive as they first appear. In their survey, Gertler and Christel Vermeersch, a World Bank senior economist, found that providers knew 63% of the appropriate clinical protocols for prenatal care but only delivered about 45% of them. That's a difference of 18%. On average, the financial incentives reduced the gap by 4 percentage points, from 45% to 49%.

Interestingly, the researchers found that the more skills the practitioner had, the higher the impact of the financial incentives.

Rather than investing more money into the current healthcare system, we can attempt to get more out of the existing resources," says Gertler.

-Written by S.Z. Berg, author of College on the Cheap, for MainStreet

Also see: Your Badonk and Cancer Sticks Will Cost You Under Affordable Care

EXCLUSIVE OFFER: See inside Jim Cramer’s multi-million dollar charitable trust portfolio to see the stocks he thinks could be potentially HUGE winners. Click here to see his holdings for FREE.

View Comments