Memo to Washington health policy experts: doctors are people, too!

Healthcare researchers have recently discovered what Adam Smith knew in 1776: Patient outcomes are better when doctors are paid for how well they perform specific medical procedures. This traditional arrangement is better for patients than when everyone gets paid a set amount.

So-called “pay for performance” shifts the focus from just getting the job done to doing a job well. (Of course, when I was in the government, public employees used to tell me, “A job done is a job well done.” No wonder Washington is such a mess.)

A new program conducted at University of California, San Francisco and The New York City Department of Health, awarded physicians “extra” pay when they were successful in providing care that reduced the long-term risk of heart attack and stroke.1 This included incentives for handling more difficult cases complicated by diabetes, coronary artery disease, intractable hypertension, or other difficult-to-treat patients.

Physicians who worked under “pay for performance” had results that were two to eight times better than physicians in the standard flat fee arrangement.

Obamacare mandates that everyone have healthcare insurance and that insurance plans include preventative services. Old-fashioned “major medical” plans that cover only hospitalization (but still protect people from being bankrupted) are strongly discouraged. In fact, these “catastrophic coverage” plans end up costing more than full-service plans under the new schemes.

The concept of preventing diseases in humans is wonderful. But it is a long-term goal. To achieve it health policy experts need to realize that those providing care will do a better job when they are given incentives for success—just like everything else when it comes to people.

You can’t “mandate” disease prevention without treating each patient, each physician, and each case individually and providing incentives for it—not just having the government “order it up” the way it tries to force people to comply with their other political and power-grabbing agendas.


1 Bardach NS, Wang JJ, De Leon SF, et al. Effect of pay-for-performance incentives on quality of care in small practices with electronic health records: a randomized trial. JAMA. 2013;310(10):1051-1059.