Wednesday, February 07, 2007

Health Insurers Rate & Rank Doctors, Adding to U.S. Heavy Losses

When President Bush talks about the economic miracle of Japan post World War II, he leaves out the American credited with teaching the Japanese to make quality products. When George W. “manages”, he ignores most of those same leadership theories. In Dr. Deming’s last book, The New Economics for Industry, Government and Education he cites management practices that frequently make things worse.

One of those is ranking people, teams, divisions and/or salesman, rewarding those at the top and punishing those at the bottom. This is the basis for President Bush’s No Child Left Behind education efforts.

Health insurers are doing just that with their physician quality ranking programs. A physician is recognized as excellent one year, given a $5,000 bonus. Two years later that same physician gets a letter saying he failed to qualify for their designation of “high quality” doctor. The cause of this physician’s movement within the performance range over time? It's variation.

Dr. Deming said a leader needs profound knowledge which comprises 4 areas of theory, systems, variation, knowledge, & psychology. It also includes their interaction.

Insurance companies need to understand both systems and variation in order to understand physician performance on any measure. Data needs to be operationally defined and collected the same way across all organizations submitting physician data.

The data used to rank doctors comes from coded bills which insurance companies admit “is not perfect” and “coding errors do occur”. How frequently?

The doctor cited excellent, then not of high quality was told he didn’t take good care of diabetic patients. Yet, one third of the patients listed by the insurer did not even have the disease.

Yet insurance companies say they need to offer this service to meet employers’ expectations. A Consumers Union spokesperson offered “In the next 10 to 15 years we'll figure out a happy medium on ranking. The data (now) has to be taken with a grain of salt. But we'd still rather have the data."

Dr. Deming offers a difference perspective.

Differences there will always be between any two people. The question is what do the differences mean? Some knowledge about variation is required to answer this question. Ranking is a farce. Apparent performance is actually attributable mostly to the system, not to the individual."

If management were to spend as much time and effort to improve processes as they do ranking, rating, reward and punishment for people at the top and at the bottom, the results would be stupendous improvement of our economic position.

As George Bush and our nation’s health insurers pursue the ranking of providers, the heavy losses continue. Dr. Deming also said ranking creates competition between people while demoralizing them. What happens if the large number of doctors over 55 years old decide they don’t want to put up with Medicare payments cuts, federal pay for performance, or insurance company labels?

What will a significant number of physician retirements do the President’s supply and demand market initiatives? Rest assured the rich will continue to get their health care, certainly from “high quality” doctors, as they may be the only ones left...

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