Pay For Hospital CEOs Linked More To Technology, Patient Satisfaction Than Quality, Study Finds

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TOPICS: HOSPITALS, DELIVERY OF CARE, HEALTH COSTS, MARKETPLACE, QUALITY

By Jordan Rau

KHN Staff Writer

OCT 14, 2013

What do hospital boards value in a chief executive? A new study of CEO pay at nonprofit hospitals finds that executives at institutions that have a lot of fancy medical technology and high patient satisfaction are paid more than their peers. But running a hospital that scores well on keeping more patients alive or providing extensive charity care does not translate into a compensation bump.

"The finding on quality is disappointing: It says that most boards are more focused on the fanciest technology around," said Dr. Ashish Jha, a professor at the Harvard School of Public Health and one of the study’s authors. "This paper suggests that maybe we need to pay a little more attention to other more important outcomes, such as whether your patients are dying at a high rate or not."

CEOs of technology-laden nonprofit hospitals earned on average $136,000 more than those with little advanced machinery, according to the study published Monday in the journal JAMA Internal Medicine. CEOs at places with high patient satisfaction scores earned on average $52,000 more than those with poor reviews.

The study found no difference in CEO compensation depending on publicly available measures of quality, including mortality rates, readmissions rates and how consistently hospitals followed a number of publicly reported guidelines for recommended care. This results are in line with a report last year that focused on New Hampshire hospitals and also found no relationship between CEO pay and quality of care.

For some time, nonprofit hospitals have been under scrutiny for paying lavish salaries to CEOs while giving little back to their communities. Dr. Karen Joynt, the study's lead author, said that since nonprofit hospitals do not have to pay any property taxes, the researchers wanted to see if there was any evidence hospital boards gave financial rewards to CEOs to provide more charity care, such as treating lots of low-income patients and discounting or waiving bills for those who had trouble paying. "We didn't see a signal at all," she said.

The study is the first to use federal tax returns of hospitals to assess CEO pay and the factors that are associated with it. The researchers examined records for 2,581 hospitals, more than 98 percent of private nonprofit hospitals. For-profit hospitals, which are a minority of America’s acute care hospitals, were not included in the analysis. The analysis identified 1,877 executives, with some running more than one hospital.

The researchers compared the highest performing hospitals with the lowest performing hospitals after adjusting for all other factors, such as the size, whether the hospital was located in an expensive part of the country and whether it was an academic medical center or community hospital. They also adjusted for CEOs who ran more than one hospital.

The average CEO compensation was $595,781 in 2009, the most recent year for which the tax returns were publicly available when the study began. As would be expected, the study found that CEOs who ran bigger hospitals were paid more -- an average of $550 more per bed. CEOs of academic medical centers were paid $425,000 more than CEOs running nonteaching hospitals.

The researchers employed a technology index that assessed the number of advanced machines such as MRIs and positron-emission technology, also called PET scans. The index also factored in whether the hospital performed complex operations such as transplants and open-heart surgery. The researchers divided the hospitals into four groups, based on this index. The average CEO compensation at hospitals in the group with the most technology—after all other factors were taken into account —was $664,000, while the average compensation for CEOs at hospitals in the group with least amount of sophisticated technology was $528,000, 26 percent lower.

Dr. Warren Browner, the CEO of the California Pacific Medical Center in San Francisco, questioned the paper’s conclusions in a commentary that the journal also published. He wrote: "Their conclusion that advanced technology drives CEO pay might be right, but an observational design cannot rule out alternatives, such as CEOs at fancier hospitals earn more because they are worth more, or because the members of the board compensation committees at glitzy hospitals are more accustomed to higher incomes."

Browner disputed the researchers' suggestion that hospital boards need to place more emphasis on quality when setting compensation, saying that already is a widespread practice. He suggested that hospital boards may be judging CEOs using internal metrics that are different than those available to the Harvard researchers.

The researchers acknowledged that possibility, but said that the public measures, such as mortality, should be relevant in assessing any hospital leader. "It's hard to argue that death rates after a heart attack don't matter," Jha said.

They found that on average, the group of hospitals with the highest patient satisfaction scores paid their CEOs nearly $626,000 while CEOs of hospitals in the group with the lowest scores earned $574,000. Patient satisfaction is considered one marker of quality, although there is disagreement about how much it is influenced by extraneous factors such as the lavishness of the hospital facilities.

Browner wrote that it would not be surprising if hospitals used the public patient satisfaction measures as a metric, but wrote that it was “unclear” whether those reflect medical quality. "Indeed, at our hospital, overall patient satisfaction is markedly higher among those who were in private rooms," he wrote. "So, too, is their satisfaction with the physicians, nurses, tests and treatments, and even the food! Talk about a halo effect."

http://www.kaiserhealthnews.org/Stories/2013/October/14/study-finds-ceo-pay-linked-to-technology-and-patient-satisfaction-not-quality.aspx

Medicare To Tie Doctors' Pay To Quality, Cost Of Care

By Jordan Rau

KHN Staff Writer

APR 15, 2012

This story was produced in collaboration with 

Twenty thousand physicians in four Midwest states received a glimpse into their financial future last month. Landing in their e-mail inboxes were links to reports from Medicare showing the amount their patients cost on average as well as the quality of the care they provided. The reports also showed how Medicare spending on each doctor's patients compared to their local peers in Kansas, Iowa, Missouri and Nebraska.

The "resource use" reports, which Medicare plans to eventually provide to doctors nationwide, are one of the most visible phases of the government's effort to figure out how to enact a complex, delicate and little-noticed provision of the 2010 health care law: paying more to doctors who provide quality care at lower cost to Medicare, and reducing payments to physicians who run up Medicare's costs without better results.

Making providers routinely pay attention to cost and quality is widely viewed as crucial if the country is going to rein in its health care spending, which amounts to more than $2.5 trillion a year. It's also key to keeping Medicare solvent. Efforts have already begun to change the way Medicare pays hospitals, physicians and other providers who agree to work together in new alliances known as "accountable care organizations." This fall, the federal health program for 47 million seniors and disabled people also is adjusting hospital payments based on quality of care, and it plans to take cost into account as early as next year.

But applying these same precepts to doctors is much more difficult, experts agree. Doctors see far fewer patients than do hospitals, so making statistically accurate assessments of doctors' care is much harder. Comparing specialists is tricky, since some focus on particular kinds of patients that tend to be more costly.

Plus, properly assessing how a doctor affects costs must include not just the specific services she directly provides, but also care other providers may give, either because the patient was referred to them or because the original doctor didn't take the right preventive steps to avoid more expensive treatments later on. And without properly adjusting for patients' health problems, paying bonuses to physicians who use fewer Medicare resources might encourage doctors to stint on care or shun patients with expensive-to-treat ailments.

"It may be the most difficult measurement challenge in the whole world of value-based purchasing," said Dr. Donald Berwick, the former administrator of the federal Centers for Medicare & Medicaid Services, or CMS. "We do have to be cautious in this case. It could lead to levels of gaming and misunderstanding and incorrect signals to physicians that might not be best for everyone."

Dr. Michael Kitchell, a neurologist and chairman of the board at the McFarland Clinic in Ames, Iowa, one of the state's biggest multi-specialist practices, predicted the Medicare reports "will be a huge surprise to almost every physician." That's because the calculations of how much those doctors' patients cost Medicare include not just the services of the individual doctor but of all the doctors that provided any treatment to the patient. Kitchell said his own patients saw on average 13 other physicians besides himself.

"You're a victim or a beneficiary of your medical neighborhood," Kitchell said. "If the primary care doctors are doing the preventative screening tests, you'll get credit for that, but if you're in a community where the community doctors are doing a poor job, you're going to look bad."

Medicare officials are trying to refine the way they judge doctors as they follow the health care law's directive to phase in the new payment system, called a Physician Value-Based Payment Modifier, starting in 2015. It will initially apply only to physician groups and some specialists selected by the government, but by 2017 the payment change is supposed to apply to most if not all doctors.

The assessment "is a very important change we're putting into place, one where we're going to need a lot of feedback and deliberation," said Jonathan Blum, CMS's deputy administrator. "We're not blind to the challenges that are coming toward us."

Although the program is still being devised, it will become reality for many doctors starting in January, because CMS plans to base the 2015 bonuses or penalties on what happens to a doctor's patients during 2013.

As the nation's biggest insurer, Medicare's adoption of this approach would be "a game changer" in terms of making physicians directly accountable for costs, said Anders Gilberg, senior vice president at the Medical Group Management Association, which represents physicians groups. Medicare is "going to be shifting money from … physicians who are deemed to be high cost relative to their peers to low-cost physicians. That's going to create all kinds of new incentives in fee-for-service."

Private insurers may follow Medicare's lead, said Paul Ginsburg, president of the Center for Studying Health System Change, a Washington think tank. The formula Medicare ultimately designs to judge and pay doctors, Ginsburg said, could become "a valuable asset for private insurers, with a tool that will be somewhat bulletproof, that physicians won't attack because they've been part of the process of developing them."

But getting physician support may not be so easy, said Margaret O'Kane, president of the National Committee for Quality Assurance, a nonprofit in Washington. "Doctors are a very powerful political segment," she said. In addition, she added, "Patients are not behind this agenda. The public is very scared about managing costs."

In the reports, Medicare measures the average payments it made for each doctor’s patients, as well as subgroups of patients with common chronic conditions, such as chronic obstructive pulmonary disease, diabetes and heart failure. Medicare adjusts the costs to take into account differences in patients' age, gender, poverty and history of medical conditions.

For the resource reports, CMS has come up with a preliminary method to determine how central a role a doctor played in a patient’s care. If a doctor was responsible for at least 35 percent of a patient’s evaluation and management services, they are presumed to have "directed" the beneficiary’s care. If they didn’t direct the care but accounted for at least 20 percent of the physician fees billed for the beneficiary, they are considered to have "influenced" the care. And if they did less than that, they are considered to have "contributed" to the care.

But that method is widely considered so crude that few expect CMS will ultimately use it in payment. CMS is trying to develop more refined methods to compare physicians’ parsimony or extravagance with Medicare dollars using software programs called "episode groupers." These programs determine the combined cost for all the services—including doctors, labs, hospitals and pharmaceuticals—that were used to treat a distinct medical situation, such as urinary tract infection or hypertension attack, over a set period of time.

Initially, Medicare attempted to use existing programs devised by commercial insurers but found they didn’t work with Medicare data, according to a report from the General Accounting Office. "It is not clear that all the problems identified with the commercial groupers can be solved by a Medicare specific grouper and the timeline for its development is challenging," the report said.

Dana Gelb Safran, who oversees quality measurement for Blue Cross Blue Shield of Massachusetts, says she doubts it will be possible for the government to judge individual doctors. She predicts CMS will ultimately have to find ways to evaluate doctors as parts of groups- either formal affiliations as part of group practices or informal affiliations among doctors who refer to each other.

"There really are very few measures that we can reliably evaluate on the individual doctor level," she said. "When they move forward with the value-based modifier, there is going to have to somehow allow physicians to identify other physicians with whom they say they practice and who they say they share clinical risk for performance."

This article was produced by Kaiser Health News with support from The SCAN Foundation.

http://www.kaiserhealthnews.org/stories/2012/april/15/medicare-doctor-pay.aspx

Entrepreneurs At Health 'Datapalooza' Ask Feds For More Data - Kaiser Health News

 

By Eric Whitney, Colorado Public Radio

JUN 06, 2013

Health and Human Services Secretary Kathleen Sebelius announced the agency’s latest liberation of data from its vast trove of health care information this week, making public for the first time price and quality specifics for 30 different out-patient procedures at hospitals nationwide.

But this data stream is not big enough or fast enough for some entrepreneurs.

"Thank-you, Secretary, for releasing 30 of 30 million things you need to release," chided Jonathan Bush, CEO of practice management and health data company Athena Health.

Sebelius, who was speaking at the annual Health Datapalooza conference Monday in Washington, told Bush and hundreds of other tech entrepreneurs that the Obama administration is "a great believer that unlocking our data, turning it over to those of you that know how to formulate that data for policymakers and providers, is the best possible thing to do."

The White House is trying to spur innovation by releasing more of its data from Medicare, Medicaid and other sources. It’s using the approach taken by the National Oceanic and Atmospheric Administration as a prototype, hoping to trigger a blossoming of new products, services and businesses similar to what happened when that agency threw open the doors to its weather forecasting models and other data. 

But Bush said the federal government also could learn from the private sector in how it shares valuable price and quality intelligence with entrepreneurs. Health plans, he added, are a lot more forthcoming with the kind of information care management companies like his need to steer patients to the best value and avoid inefficient operators.

"My hope is the pressure will build and eventually [HHS] will let go," of more claims data, said Bush, who is a cousin of George W. Bush.

Datapalooza is an effort by "data liberators" in government, academia and private industry to build  pressure for more access to health care information like utilization rates, geographic anomalies and just about anything else the government and private industry knows about patients, payers and providers. The idea is that, in the hands of creative entrepreneurs, "lazy data" can be transformed into innovative new products and services.

The "conditions are aligned unlike they've ever been aligned before," for health care transformation, said Steven Krein, a tech entrepreneur and co-organizer of Datapalooza. Out-of-control health care costs and Affordable Care Act initiatives to drive them down are creating new opportunities for data scientists to reduce waste and inefficiency, making money for themselves from the savings they can deliver to health plans, health care providers and patients.

Hospitals are willing to pay for new computer modeling software that predicts, for instance, which patients are most likely to be re-admitted within 30 days of discharge. Government penalties for high re-admission rates are creating that incentive, and if programmers can create effective models that cost less than hospitals would pay in penalties, hospitals come out ahead. So do patients, who benefit by not having to return hospitals. Health plans win by not having to pay for re-admissions.

"The world now recognizes that the critical component to driving transformation in this system that badly needs disruption is data," agreed HHS Chief Technology Officer Bryan Sivak.

"Healthcare is very backward," said technology Venture Capitalist David Jones of Chrysalis Ventures. The industry is probably two decades behind purely digital companies like Google and big retailers like WalMart in terms of being able to gather and analyze consumer data, and use to adapt to market demand and improve efficiency and competitiveness, he said.

More than 60 entrepreneurs showcased new data-driven healthcare applications at Datapalooza.

Among them, the two 28-year-olds behind Aidin, a brand-new tech company aiming to make it easy for people to choose the right post-hospital care. 

Mike Galbo and Russ Graney, who have no previous experience in healthcare, dove into health data after having bad experiences watching loved ones struggle in less-than-ideal rehabilitation facilities. 

"A nurse from the hospital presented us a list of all the providers in the area with their phone numbers and addresses, and said to us, 'I'm going to be back in an hour, tell me where you want your uncle to go,'" Graney said. He got out his smartphone, but couldn’t find good information to help him shop for the right facility, and ended up picking the one closest to home. Substandard care there, he said, meant his uncle had to be re-admitted to the hospital a short time later.

So Graney and Galbo combined HHS data with information they gathered on their own to create an online shopping tool that made quality ratings and patient reviews easy to find and use. They're piloting it in four hospital systems this year, and expect that by this fall that it will be used to place about 30,000 patients in post-acute care facilities.

This story is part of a collaboration that includes Colorado Public Radio, NPR and Kaiser Health News.

Entrepreneurs At Health 'Datapalooza' Ask Feds For More Data - Kaiser Health News