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Transforming Care: Paying Physicians for Value-Based Care

Transforming Care: Reporting on Health System Improvement d3aa4318-f055-4544-8709-0588e77cd402

In Focus: Tying Value-Based Contracting in Health Care to Value-Based Pay for Physicians

This inaugural issue of Transforming Care examines efforts to align physician incentives with the organizational goals of health systems and provider groups that have entered into contracts that reward them for delivering high-quality, cost-effective care. These organizations’ early experiences suggest ways of surmounting the challenges that often arise in designing incentive programs — including how to prioritize and streamline the many measures that payers use to define quality and value and how to deploy nonfinancial incentives to motivate behavior.

As health care organizations take on contracts with insurers that reward them for providing high-quality care and controlling costs, they must align their new organizational priorities with the incentives they offer providers. After all, it’s the many decisions frontline providers make daily that add up to the cost and quality achieved by health systems.

Doing so is no easy task, particularly for organizations that still receive the majority of their revenue from fee-for-service payments, which create compelling and competing incentives to pursue volume and provider productivity at the expense of other goals. There’s also little agreement on the most effective way of motivating physicians: Is money best in some situations? Or is it more effective to appeal to physicians’ professionalism, their desire for mastery, and their competitiveness?1

This issue of Transforming Care reports on health systems and provider groups that are working to answer these questions by testing approaches that differ from traditional pay-for-performance programs, which have had mixed results to date.2 The new compensation approaches seek to engage physicians in providing high-value care by, for example, creating incentives for them to proactively manage their patient panels, collaborate with others, and attend to the costs of care.

For these value-based payment approaches to succeed, physicians must be on board. “A lot of provider organizations entering into new value-based arrangements are not doing anything to change how they compensate their employed providers,” says Michael Bailit, president of Bailit Health Purchasing, a Massachusetts-based consulting firm. “It isn’t hard to see how such a misalignment will create a performance problem. Say an organization is assuming financial risk for the total cost of care and yet paying employed physicians in a manner that rewards them for increased volume of services: you’ve got a problem.”

Early Experiments

Organizations are incorporating measures of value into their physician compensation programs in a wide variety of ways, says Bailit, who with colleagues interviewed leaders of 16 health systems that had recently changed their physician compensation packages. He found no two approaches were the same: some relied on specific measures of value that they imposed systemwide, while others created a menu of measures and let physicians or departments choose. The proportion of physician compensation linked to measures of value also varied considerably, ranging from 10 percent to 60 percent.

Bailit found the measures used to assess value generally fell into six domains: clinical quality/patient safety, patient satisfaction, access to care, citizenship (e.g., through participation in an organization’s governance), efficiency, and use of health information technology. But measures of productivity remained important, too. “Organizations seem to be trying to counterbalance longstanding incentives to do more in order to earn more with value-based measures and incentives,” Bailit says. “It’s a balancing act.”

Getting the Formula Right

Finding the right number of measures can be tricky. Some organizations choose just a few in an effort to make them more salient to providers. Massachusetts General Physicians Organization, which receives about 40 percent of its revenue from risk-based contracts, selects just three measures for its physician incentive formula, changing them twice a year. One or two are designed to focus all physicians on shared goals, such as medication reconciliation, while the remainder are selected by each department (Exhibit 1).3 (Physicians who meet the targets are eligible for bonuses up of to $5,000.)

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But other leaders say you can’t achieve widespread change by focusing on just a handful of items. Chicago-based Advocate Physician Partners, a joint venture between Advocate Health Care and about 5,000 independent and employed physicians, uses 170 different measures to assess care quality and value in its incentive program (up from 35 nearly a decade ago), with different measures for different specialties. Rather than adopting these measures from payers, the organization established its own set, which payers agreed to adopt and review annually.

“This gets rid of a lot of confusion and duplication,” says Pankaj Patel, M.D., senior medical director of Advocate Physician Partners. “Perhaps more important, when we give feedback to physicians, we give it based on performance related to the majority of patients in their practice—not just slivers based on patients in individual insurance programs. They get much more robust, meaningful feedback.”

As Advocate Physician Partners took on more value-based contracts in recent years (they now represent nearly three-quarters of its business), it altered the formula it uses to assess what it calls the “value contribution,” of each physician. Not only does the formula assess physicians’ clinical performance, it also takes into account the volume of patients they treat, and the degree to which they coordinate their care (measured by the extent to which care is provided within the network and how effectively physicians link patients with care managers).

“So it is no longer how well did you do with your diabetic patients in terms of sugar control and so forth, but how well did you do on all of our performance measures and how many patients are you managing and how well are you coordinating their care,” Patel says.

Facey Medical Group in Southern California, which has capitated, risk-based contracts for two-thirds of its patients, aims for the middle ground between “death by a thousand measures” in the words of its CEO, Bill Gil, and having too few to matter. To assess clinical quality and value, the medical group (which is affiliated with Providence Health and Services), selects three to five measures for each specialty each year, focusing on those for which there is significant performance variation and ample numbers of patients affected. Its overall compensation formula takes into account productivity, efficiency, and citizenship, as well as clinical quality (Exhibit 2).

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Implementing Effective Reward Systems

While health systems and provider groups are working to develop compensation formulas that are both meaningful to providers—with measures of clinical quality and value they believe are fair and have an ability to influence—and useful for making comparisons, they are also experimenting with ways of reporting performance and rewarding providers.

Minnesota’s Fairview Health Services, which replaced its fee-for-service compensation model for primary care providers with new incentives based on measures of productivity, quality, patient experiences, and costs in 2011, tried something unconventional: rating clinicians (including primary care physicians, nurse practitioners, and physician assistants) based mainly on the performance of their clinics, rather than as individuals, on the theory that population health management is a team sport. While this approach led to improved performance, researchers also found it greatly frustrated clinicians, who felt they had little control over their compensation.

Some organizations also are borrowing principles from behavioral economics in efforts to boost the effectiveness of physician incentive programs, including loss aversion—the idea that people are more motivated by the fear of a loss than the opportunity to gain. Massachusetts General used this principle when at the outset of its program it gave upfront incentive payments to physicians that were tied to working on certain metrics and goals in the future.

Partnering with University of Pennsylvania researchers, Advocate is testing the effects of several different approaches to reporting and rewarding physicians. It will test whether it’s possible to promote greater collaboration among providers by making half of a physician’s incentive payment dependent not on their individual performance, but on the performance of their physician–hospital organization—up from 30 percent now. It’s also testing the effects of giving providers continuous feedback on their performance through a registry of 1.4 million patients that’s updated daily. “Maybe when you give physicians real-time feedback they proactively manage their patients,” Patel says. “They don’t wait to the end of the year and do a mad dash to get all of their patients in for visits or needed labs.” Finally, Advocate is testing to see if framing the incentive as a potential loss rather than a gain has an impact on behaviors.

Beyond Financial Incentives

As organizations experiment with different compensation formulas and reward systems, they also must grapple with the vexing question about the best ways to motivate physicians: through extrinsic motivations such as financial bonuses, or intrinsic motivations such as the desire to help others or experience a sense of purpose or competence.

Results from Blue Cross Blue Shield of Massachusetts’ Alternative Quality Contract—in which physician groups that achieved savings and met quality targets received substantial bonuses—suggest that financial incentives are not always essential to changing physician behavior. Some of the successful groups shared the funds with individual physicians, but some didn’t. “The physician incentive model wasn't consistent at all across the groups,” says Robert E. Mechanic, M.B.A., senior fellow at the Heller School of Social Policy and Management at Brandeis University and one of the program's evaluators.

It may be that it’s hard to use money as an effective signal to cut through the noise of physicians’ busy work lives. Many physicians have complicated reimbursement packages (with some receiving purely fee-for-service compensation while others are paid through a blend of salary as well as bonuses for meeting productivity or other targets)—making it harder to discern changes. A national survey found that one of six doctors didn’t even know whether they were eligible for performance incentives.4

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Public reporting of comparative performance data, for example through a website, is another approach to influencing physician behavior, and experience from the Wisconsin Collaborative for Healthcare Quality suggests it can be a powerful motivator to change.

Some suggest that appealing to physicians’ desire to serve patients and deliver the best possible care may be the strongest motivator. Amol Navathe, M.D., Ph.D., assistant professor of health policy and medicine at the University of Pennsylvania, points out that a “physician acts as an agent first and foremost for the patients—making decisions and recommendations on their behalf. That is very powerful in differentiating how physicians are influenced compared to other workers.”

The Choosing Wisely campaign, which seeks to reduce the use of wasteful or unnecessary medical procedures, has gained traction by appealing to physicians’ professionalism (the lists of recommended procedures to question are created and promoted by several different medical specialty societies). Researchers at Weill Cornell Medical Center are seeking to build on this work by testing whether use of public commitment contracts—which have helped people achieve personal goals like losing weight or quitting smoking—can work in a professional environment by encouraging physicians to stick to their goal of avoiding delivery of low-value care.5

Of course, changing physician behavior requires more than just paying them fairly and well or offering strong motivations—successful health systems offer training and support to ensure providers are able to focus on managing patients’ care. Mechanic notes four factors that need to be in place to change behavior: a culture focused on improvement, data tracking to measure performance and feedback information to physicians, systems to help providers identify and resolve care gaps, and finally financial rewards. “It is important to have a financial signal so that clinicians know what the organization values, but groups need to have these other supports in place as well,” says Mechanic. “You can’t just have financial rewards and nothing else.”

Lessons and Next Steps

In spite of the uncertainty about the best ways to align physician compensation with health care organizations’ embrace of value-based care, there are some clear lessons emerging from their efforts thus far.

First, leaders need to include physicians in the development of compensation strategies and auditing systems and then proactively educate physicians about how changes in their compensation are aligned with the organizations’ strategic and financial goals. “Early adopters recommend a shadow period before officially altering compensation to inform physicians and administrators of the potential impact, allow time for modifications, and reduce anxiety,” says Mary Beth Dyer, a senior consultant with Bailit Health Purchasing. Facey Medical Group gives new physicians a three-year “incubation period” before adjusting their pay based on performance.

It’s also important to reduce the time between measuring and reporting performance, and between reporting performance and rewarding incentives (or vice versa, if upfront payments are used). Providers and payers also should work toward alignment on how to assess “value” in health care. As they do so, they should strive to develop assessments based not on expediency but on meaningful and actionable measures of care quality, efficiency, and outcomes. In particular, efforts should be made to include patient-reported outcomes in physician assessments.

Aiming for full transparency around incentives—though it can be painful—also may be important. “I want all doctors in our system to know what every doctor made—and to see that superstar performance is rewarded significantly higher,” says Gil, noting that doctors can handle knowing there are winners and losers.


1. While some organizations have begun to offer new incentives to nonphysician providers such as nurse practitioners, nurses, and physician assistants, most efforts target physicians. For this reason, we have focused this issue on physicians.

2. For discussion of the mixed results of pay-for-performance programs, see S. Woolhandler and D. Ariely, “Will Pay for Performance Backfire? Insights from Behavioral Economics,” Health Affairs Blog, Oct. 11, 2012.

3. D. F. Torchiana, D. G. Colton, S. K. Rao et al., “Massachusetts General Physicians Organization’s Quality Incentive Program Produces Encouraging Results,” Health Affairs, Oct. 2013 32(10):1748–56.

4. K. L. Ryskina and T. F. Bishop, “Physicians’ Lack of Awareness of How They Are Paid: Implications for New Models of Reimbursement,” JAMA Internal Medicine, Oct. 2013 173(18):1745–46.

5. Some researchers have found commitment contracts can influence physician prescribing. See D. Meeker, T. K. Knight, M. W. Friedberg et al., “Nudging Guideline-Concordant Antibiotic Prescribing: A Randomized Clinical Trial,” JAMA Internal Medicine, March 2014 174(3):425–31.

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Q&A: Reforming Physician Incentives—A Round-Up of Expert Views

By Sarah Klein and Martha Hostetter

On Making Performance Measures Meaningful
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Amol Navathe, M.D., Ph.D., assistant professor of health policy and medicine at the University of Pennsylvania Perelman School of Medicine

Q: When it comes to designing workplace incentive programs, are there unique things about the way physicians work that necessitate a different approach?
A: Absolutely. In economic terms, we think of the principal–agent relationship, meaning physicians act as agents first and foremost for the patients—making decisions and recommendations on their behalf. This is unlike other employees who have an almost singular duty to their employers or customers. However with health care reform, physicians are increasingly being asked to serve as agents for not just patients and society, but also for health insurers, for accountable care organizations, and as agents of value-based care. As a result, employers must adapt incentive programs so they align the multiple agency relationships that physicians carry.

Q: What about transparency in reporting performance at the individual physician level. How important is that?
A: When using unblinded reports, physicians have to feel it’s a fair comparison, that it’s people they perceive or know to be their peers. If not—say in a large-scale reporting program in which physicians are being compared to someone in another market and it’s unclear what resources they have—comparisons may actually be harmful rather than helpful. It’s important to remember that as a group, physicians are quite motivated to meet professional standards and not lag [relative to] colleagues, so peer effects can be very powerful.

Q: What are some of the biggest unanswered questions in this field?
A: We don’t yet understand how the design of incentives influences behavior and performance. It is very much an open space still. The many open questions include the what, when, and how of information feedback. We know that we probably need to simplify the hundreds of quality measures the National Quality Forum has endorsed down to a practical set that we can make salient, actionable, and tied to meaningful amounts of both financial and nonfinancial incentives. We just don't know which measures and how many to use.

Q: Your work focuses on using behavioral economics to change physician behavior. What are some good examples of how health systems used them—perhaps unwittingly?
A: Most, if not all, health systems that use behavioral economics were trying to solve their business needs through trial and error, rather than with an explicit agenda to use psychology and economics to motivate behaviors. There are several good examples, including group-based incentives, dashboards with peer comparisons, and public award ceremonies.

On Communicating Your Approach
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Pankaj Patel, M.D., M.Sc., senior medical director, Advocate Physician Partners

Q: How does Advocate communicate its strategies for increasing the value of the care it provides?
A: There are a couple of things. One is having an entire team of people who meet monthly with all of our clinicians. They explain the program, ask if there are problems or issues, and liaise back and forth with the local physician–hospital organization and Advocate Physician Partners’ management team. Then we have a variety of other communications—from 15-minute videos to flash reports that go out via email to say this is a big issue, or we are behind in this, or we are doing well here. There is also a requirement that physicians participate in training sessions and attend meetings that go over how the program works, how it applies to them, and what are the measures relevant to them. We also have developed an interactive continuing medical education (CME) program that physicians are required to participate in. For instance, the immediate past president of the American Academy of Allergy, Asthma, and Immunology is one of our physicians and he helped us develop a CME program on what we think are our best practices for asthma care—it condenses the NIH guidelines into 45 minutes.

Q: You’ve said Advocate didn’t set out to employ the principles of behavioral economics in its physician incentive program, but in essence did. What’s an example?
A: We have these annual end-of-year meetings where the independent doctors get their incentive checks. So you can imagine they are well attended. We take that opportunity to highlight big things that are happening in health care, and to explain to physicians what we are doing to try to stay ahead of the curve. And then we do some nonfinancial things. So the top 25 percent of primary care physicians, specialists, they get a framed certificate. I am always amazed—some physicians seem more interested in their plaques and certificates on their wall than any kind of financial incentives. Of course, that’s not everybody. About a year ago a physician wrote me this lengthy letter saying “I am a top performer and I got this excellent physician recognition. Please do not use precious health care dollars on printing out a certificate.”

On Creating Feedback Loops
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François de Brantes, M.S., M.B.A., executive director, Health Care Incentives Improvement Institute

Q: Years ago you helped create Bridges to Excellence, an incentive program that allowed employers and payers to reward providers for among other things reducing avoidable complications in patients with chronic conditions. You’ve said one of the keys to its success was relying on data in physicians’ medical records—rather than claims data—to assess performance. Why was this so important?
A: It’s not a scorecard that’s calculated using algorithms off of claims data, which often have really significant errors and are the reason why, when physicians say “This is garbage,” it’s not hyperbole. We said this is your information, not ours: if you are not documenting stuff, which many of them didn’t, if you are not correctly assessing your patients’ vitals, that is your problem, not my problem. After that one of the most striking comments that came up, again and again and again, was, “I am just not doing as well as I thought I did.” That was a very powerful incentive.

Q: What other mistakes do incentive programs make?
A: I think it’s retrospective review. Any time you create distance between performance measurement and reporting, you are removing one of the more impactful aspects of a feedback mechanism, which is its timeliness. Ultimately what you are you doing with pay-for-performance and quality improvement is providing feedback. It is how well have I done, how well I am doing, and can you tell how well I am doing in relation to other peers I respect? So it has to be timely and it has to be accurate. And of course if you are judging it in a quantitative way, the methods must be fair and transparent.

On Traditional Pay-for-Performance Programs
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Tara Bishop, M.D., assistant professor of health care policy and research at Weill Cornell Medical College

Q: When it comes to traditional pay-for-performance programs, what have we learned about what works and what doesn’t?
A: There have been very mixed results. There have been studies that have shown an effect particularly around very specific types of services. There was for example a study looking at blood pressure management and management around cardiovascular disease—done in conjunction with New York’s Department of Public Health—which did show an effect of paying providers for those quality metrics, but then there have also been studies that show no effect. Most of these programs are built upon a fee-for-service model of payment where physicians continue to get paid for the services they provide and then get additional incentives for meeting and reaching quality metrics.

Q: Is the fact that they are building on top of fee-for-service payments sending a mixed message?
A: I think it has to do with the relative incentive. If you can make more money by seeing more patients a lower incentive payment might not change behavior so much. We are still in a phase of trying to figure out what is the clearest incentive in the fee-for-service environment: is it the amount? Or how you pay? We found in a national survey nearly 17 percent of doctors don’t even know if they are getting incentive payments. There may not be enough transparency about how much you are getting in bonuses and how that affects your salary or take-home pay.

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Publications of Note

Case Management for Disabled Medicaid Enrollees Improved Access But Didn’t Yield Savings

A study that evaluated the outcomes of a nurse-led care management intervention for disabled Medicaid beneficiaries with high health care costs found the intervention group had higher odds of outpatient mental health service use and higher prescription drug costs than the control group. Participants also had fewer unplanned hospital admissions and lower associated costs, higher odds of long-term-care service use, higher drug/alcohol treatment costs, and lower odds of homelessness. The study found no net cost savings but the results suggest that care management may have the potential to increase access to needed care, slow growth in the number and therefore cost of unplanned hospitalizations, and prevent homelessness. J. F. Bell, A. Krupski, J. M. Joesch et al., “A Randomized Controlled Trial of Intensive Care Management for Disabled Medicaid Beneficiaries with High Health Care Costs,” Health Services Research, June 2015 50(3):663–89.

Patient Navigators More Effective for Older Safety-Net Patients

A study designed to determine if assistance from patient navigators reduced readmissions among high-risk, low-income patients found that it led to a 4.1 percent decrease in readmissions and increased rates of follow-up appointments among older patients. But in the group of patients age 60 or younger, there was a significant increase in readmissions (by 11.8%) with no change in 30-day follow-up. The navigators, who were hospital-based community health workers, provided coaching and assistance in navigating the transition from hospital to home through hospital visits and weekly telephone outreach. They supported patients for 30 days post-discharge with medication management, scheduling of follow-up appointments, communication with their primary care clinicians, and symptom management. The authors concluded that transition strategies should be evaluated among diverse populations, noting younger high-risk patients may require novel strategies. R. B. Balaban, A. A. Galbraith, M. E. Burns et al., “A Patient Navigator Intervention to Reduce Hospital Readmissions Among High-Risk Safety-Net Patients: A Randomized Controlled Trial,” Journal of General Internal Medicine, July 2015 30(7):907–15.

Revisit Rates to ED More Frequent Than Previously Reported

Researchers studying variation in the rates at which patients return to the emergency department (ED) after an initial visit found that within three days of an initial visit, 8.2 percent of patients returned to an ED—with 32 percent going to different institutions. The rates varied by diagnosis, with skin infections having the highest rates. Among the six states studied, revisit rates varied. In Florida, the only state with complete cost data, revisits were more expensive than on the initial one. The authors note that revisits are more frequent than previously reported, in part because many occur outside of the index institution. R. Duseja, N. S. Bardach, G. A. Lin et al., “Revisit Rates and Associated Costs After an Emergency Department Encounter: A Multistate Analysis,” Annals of Internal Medicine, June 2, 2015 162(11):750–56.

More Than Half of Medicaid Patients Using EDs for Low-Acuity Problems Prefer ED to Primary Care

A study that sought to determine the proportion of adult Medicaid enrollees with low-acuity conditions who were willing to use primary care services rather than an ED if given the choice found that a little less than half (45.3%) in a sample of 95 patients presenting to the ED would have preferred to use their primary care physician if an appointment had been immediately available. Of those preferring the ED, roughly half said they thought the ED had more technology or specialty care services available compared with their PCP’s clinic. A smaller percentage (11.5%) felt the care they received in the ED was better than what they would receive in their primary care clinic. R. Capp, M. Camp-Binford, S. Sobolewski et al., “Do Adult Medicaid Enrollees Prefer Going to Their Primary Care Provider’s Clinic Rather Than Emergency Department (ED) for Low Acuity Conditions?Medical Care, June 2015 53(6):530–33.

Primary Care Continuity Associated with Reduced ED Use and Hospitalizations in California

Given concerns that extending health insurance coverage to millions of previously uninsured Americans would give rise to increased use of ED and hospital services, researchers sought to determine whether continuity with a regular source of primary care was associated with lower use of these services. They relied on data on previously uninsured adults in Orange County, Calif., who, as part of the state’s Health Care Coverage Initiative, gained access to a safety net–based provider network and a defined package of covered benefits beginning in 2007. They found that after the Orange County program required participants to select and use a primary care provider, those who were adherent to the provider had a higher probability of having no ED visits and no hospitalizations compared with those who were never adherent. N. Pourat, A. C. Davis, X. Chen et al., “In California, Primary Care Continuity Was Associated with Reduced Emergency Department Use and Fewer Hospitalizations,” Health Affairs, July 2015 34(7):1113–20.

Medical Home Transformation Linked to Organizational Factors and Change Strategies

A study of the first 132 primary care practices in Minnesota to achieve medical home certification found that 80 percent to 100 percent of these certified clinics had 15 of the 18 organizational factors important for improving care processes and that 60 percent to 90 percent had successfully used 16 improvement strategies. Prioritizing change and use of more strategies were predictive of greater transformation. The authors note clinics contemplating medical home implementation should consider the factors and strategies identified and be sure that such a change is a high priority for them. L. I. Solberg, L. H. Stuck, A. L. Crain et al., “Organizational Factors and Change Strategies Associated with Medical Home Transformation,” American Journal of Medical Quality, July/August 2015 30(4):337–44.

State Leadership in Health Care Transformation: Opportunities and Challenges

In this commentary, the authors describe the increasingly important role states play in health care reform—as purchasers of services through the Medicaid program, as providers of health care services, as collectors of data, as grantees of federal funding for experimentation, and as conveners of business leaders, health care executives, and patient advocates. They note not all states are leveraging the opportunities available and face certain challenges. It can be difficult to align competing goals, for instance, for cost containment, population health, and care of high-need populations. States also need support from the federal government on payment and regulatory issues. Another challenge is ensuring leadership changes in executive and legislative branches of government do not derail reform efforts. A. Hwang, J. M. Sharfstein, and C. F. Koller, “State Leadership in Health Care Transformation: Red and Blue,” Journal of the American Medical Association, July 28, 2015 314(4):349–50.

Consumers Uninterested in Practice-Level Physician Ratings

Researchers studying consumers’ understanding of and interest in practice-level physician quality ratings conducted four focus groups—half with individuals who had a chronic illness and half with individuals who did not. They found most consumers correctly understand the concept of a physician practice, but exhibited little interest in practice-level characteristics, preferring instead information about their personal doctor. They also found that understanding of and interest in practice-level quality does not differ by chronic disease status. The authors recommend additional work to design, develop, and test promotional and educational materials to highlight the relevance of practice-level characteristics for consumer decision-making. B. Smith, W. D. Lynch, C. Markow et al., “Consumers’ Understanding of and Interest in Provider- Versus Practice-Level Quality Characteristics: Findings from a Focus Group Study,” American Journal of Medical Quality, July/August 2015 30(4):367–73.

Ambulatory Care–Sensitive Readmission Rates Vary by Professional Networks

A study that sought to determine whether the rate of ambulatory care–sensitive hospital admissions varies across the provider networks with which a patient’s physician is connected—even networks at the same hospital—found that these rates varied significantly across networks. There was a 46 percent difference in admission rates between networks at the 25th and 75th percentiles. At 95 percent of hospitals with admissions from two networks, the networks had significantly different admission rates. Networks with a higher percentage of primary care physicians and networks in which patients received care from a larger number of primary care physicians had higher rates. The authors note physician networks could be an important focus for understanding variations in medical care and for intervening to improve care. L. P. Casalino, M. F. Pesko, A. M. Ryan et al., “Physician Networks and Ambulatory Care–Sensitive Admissions,” Medical Care, June 2015 53(6):534–41.

Pioneer ACO Beneficiaries Had Lower Spending Increases and Utilization Than Traditional Medicare Beneficiaries

A study found fee-for-service Medicare beneficiaries aligned with accountable care organizations (ACOs) in the Pioneer program had smaller increases in spending and utilization than other fee-for-service beneficiaries while retaining similar levels of care satisfaction in the first two years of the program. Differential changes in spending were approximately −$35.62 per beneficiary per month in 2012 and −$11.18 in 2013, which amounted to aggregate reductions of approximately $280 million in 2012 and $105 million in 2013. Inpatient spending showed the largest differential change of any spending category (−$14.40 per beneficiary per month in 2012 and −$6.46 in 2013). Changes in utilization of physician services, emergency department, and postacute care followed a similar pattern. The study also found little difference in patient experience among beneficiaries aligned with Pioneer ACOs and general Medicare fee-for-service beneficiaries. D. J. Nyweide, W. Lee, T. T. Cuerdon et al., “Association of Pioneer Accountable Care Organizations vs. Traditional Medicare Fee for Service with Spending, Utilization, and Patient Experience,” Journal of the American Medical Association, June 2, 2015 313(21):2152–61.

Medicare Drug Coverage Neither Improved Health Outcomes Nor Increased Efficiency

A study examining the changes in health outcomes and medical services in the Medicare population after implementation of Part D, which provides prescription drug coverage, found no clinically or statistically significant reductions in the prevalence of fair or poor health status or limitations in activities of daily living relative to historical trends. Compared with trends before Part D, no changes in emergency department visits, hospital admissions or days, inpatient costs, or mortality after Part D were seen. B. A. Briesacher, J. M. Madden, F. Zhang et al., “Did Medicare Part D Affect National Trends in Health Outcomes or Hospitalizations? A Time-Series Analysis," Annals of Internal Medicine, June 16, 2015 162(12):825–33.

Hospital Board Management Practices Tied to Performance on Quality Metrics

After studying the relationships among hospital boards, management practices of frontline managers, and the quality of care delivered in nationally representative groups of hospitals in the United States and England, researchers found that hospitals with more effective management practices provided higher-quality care. Higher-rated hospital boards also had superior performance by management staff. Hospitals with boards that paid greater attention to clinical quality had management that better monitored quality performance. Similarly, they found that hospitals with boards that used clinical quality metrics more effectively had higher performance by hospital management staff on target setting and operations. T. C. Tsai, A. K. Jha, A. A. Gawande et al., “Hospital Board and Management Practices Are Strongly Related to Hospital Performance on Clinical Quality Metrics,” Health Affairs, Aug. 2015 34(8):1304–11.

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Editorial Advisory Board

Special thanks to Editorial Advisory Board member Christopher Queram for his help with this issue.

Eric Coleman, M.D., M.P.H., associate professor of medicine, University of Colorado 

Don Goldmann, M.D., senior vice president, Institute for Healthcare Improvement 

Thomas Hartman, vice president, quality improvement, IPRO 

Rosalie Kane, Ph.D., professor of public health, University of Minnesota 

Gordon Mosser, M.D., senior fellow, School of Public Health, University of Minnesota 

James F. Pelegano, M.D., M.S., Program Director, Masters of HealthCare Quality and Safety, Thomas Jefferson University

Christopher J. Queram, M.A., president and CEO, Wisconsin Collaborative for Healthcare Quality

Michael Rothman, director, quality and operations support, Permanente Medical Group of Northern California

Paul Schyve, M.D., senior advisor, healthcare improvement, Joint Commission 

Editorial Team 

Sarah Klein, B.A., editor

Martha Hostetter, M.F.A., contributing editor, [email protected]

Douglas McCarthy, M.B.A., contributing editor

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