Income Tied To Outcome

In a recent New York Times article, it was reported the company that runs New York City’s public hospitals have proposed tying physician pay with patient outcomes and readmission rates.  Simply, the corporation’s plan would make doctors’ raises dependent on their performance on specified quality measures.  Will this structure increase the quality of care for patients?  Will this practice help with cost containment in healthcare and decrease the number of unnecessary procedures?  The government thinks so.  The New York Times writes,

“Over the next few years, the federal government will financially reward or penalize hospitals based on how they perform on benchmarks that are believed to be correlated with better patient outcomes. By aligning doctors’ pay to the same benchmarks, city hospitals hope to perform well enough to qualify for federal bonuses.”

There are many critics to this compensation philosophy in healthcare.  As former physician, turned entrepreneur, now venture capitalist, Alan Ying invests in companies that help make healthcare systems, payers and providers more efficient.

“This concept isn’t new to the healthcare industry, it is just becoming more widespread.  Patients are becoming discerning consumers of healthcare and providers are recognizing the need to provide a high-quality service.  With much of healthcare reform focused on controlling costs, the stars just may be aligned for this concept to become the norm.”