Emory Report
March 6, 2006
Volume 58, Number 22


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March 6 , 2006
Future Maker shares thoughts on pay-for-performance health care

BY Alfred Charles

A recent Future Makers lecture by a leading health care administrator could hold lessons for Emory Healthcare as it seeks to deliver better patient service.

A standing room only crowd gathered Feb. 23 inside the Emory Hospital Auditorium to hear Steven Lipstein, an Emory alum who majored in economics and is now president and chief executive officer of BJC HealthCare in St. Louis, discuss his hospital’s experience with a health care trend known as pay for performance.
“It’s a topic that is really important, and one we’re all hearing a lot about,” said Michael Johns, executive vice president for health affairs.

Essentially, pay for performance is a term used to describe linking the quality of service delivered by doctors and other health care providers to the amount of money they receive for performing it. The goal is to reward physicians for superior service delivered in the most cost-efficient manner.

Insurance companies are embracing it as a way to compensate health providers considered to be the best in their field. Some experts contend the current health care compensation system rewards providers based only on the number of services they render, which they say has diminished quality of care.

Lipstein spoke about the furor that erupted last year when one large insurer, United Healthcare Corp., sought to institute a pay for performance system in the St. Louis metro area. As CEO of BJC HealthCare, one of the nation’s largest health care organizations with annual revenues exceeding $2.5 billion, Lipstein was on the front lines of a high-stakes battle that revolved around medicine and money.

“We got off to a bad start with pay for performance in St. Louis,” he said.

The United plan, a pilot program, sought to identify health providers who met a series of benchmarks tied to cost and quality of service. Those providers, known as “star performers,” would form the insurer’s in-network group.

Administrators at United created in-house rankings and formulated criteria to determine which providers would receive the star designations. Lipstein told the group that United’s internal rankings favored cost over the level of service provided by a physician. He and other administrators in St. Louis argued in newspaper stories and editorials that the company’s criteria were flawed because they did not adequately quantify doctors’ quality of service.

The outcry was so loud that United halted the star-designation program after some health providers, including Lipstein’s BJC HealthCare, threatened to stop accepting patients insured by United.
Lipstein suggested that the episode holds lessons for Emory and other health care providers because the industry must agree on several basic terms if pay for performance is to succeed. He said the metrics and measurement methods used to evaluate doctors, as well as payment consequences, must have mutual agreement.

“United Healthcare did not use widely recognized and generally accepted performance metrics,” Lipstein said.

Lipstein’s address on pay for performance was part of the Future Makers lecture series, which brings leaders in health, science, business and government to the Emory campus to discuss topics relevant to the University’s clinical, teaching and research missions.