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Decreasing Costs and Increasing Quality Return to Informing the Health Care Debate »
Despite investing $1.7 trillion annually in health care, the U.S. health care system is plagued with inefficiency and poor quality. The need to control costs while also increasing quality of care figures prominently in the health care reform debate. Better information systems could help, as could efforts to pay for quality and outcomes rather than for number of services delivered. RAND analysts have conducted extensive work on quality of care, estimated the costs and benefits of wide-spread adoption of health IT, assessed the effects of pay-for-performance programs, and conducted studies on public reporting of performance information and its effect on performance and patient experience.
Quality of Care
RAND has been conducting research on measuring and assessing quality of health care for 40 years, and RAND developed many of the measures now used around the world to assess and improve quality. RAND's Quality Assessment (QA) Tools, a set of measures and methods for "scoring" quality on a consistent and clinically sound basis, was used to conduct the first national assessment of quality of care in America. RAND analysts found:
- Overall, adults in the U.S. receive about half of recommended care. That's true no matter where individuals live; what kind of insurance they have; or what their race, gender, or financial status is.
- The gap between the care patients should receive and what they actually get probably contributes to thousands of preventable deaths each year.
- Children in the U.S. receive less than half of recommended care; quality varies by clinical area, ranging from 92% of recommended care for upper respiratory infection to 35 percent for adolescent preventive services. Elderly in the U.S. receive less than one-third of recommended care for geriatric conditions.
- Quality of care matters: Patients who receive better care are more likely to be alive three years later than those who received poorer care.
TopHealth Information Technology
Health IT refers to a variety of electronic tools for use in the management of health information, including the electronic medical record (EMR) and computerized physician order entry (CPOE). RAND analysts estimated the potential costs and benefits of health IT, assessed the standards for health IT systems, and examined the literature on how health IT affects costs and quality.
- Microsimulation modeling predicts that increased health IT adoption and connectivity will decrease health spending in the long run. However, only a few empirical studies have been conducted that assess the effects of health IT on spending. Substantial new investments in health IT infrastructure will be required by providers, while the savings will accrue more to the payers.
- Health IT should improve quality of care by reducing medical errors and adverse drug events, increasing the rates of recommended care, and decreasing duplication of tests. Several small studies document such outcomes; however, it is unclear how generalizable these results are to the entire U.S. health care system.
- To date adoption of health IT has proceeded unevenly across the country. Achieving widespread health IT adoption and connectivity will be difficult because of the fragmented nature of the health care system and the number of documented barriers to successful health IT adoption.
Pay-for-Performance
Pay for performance (P4P) uses financial incentives to stimulate improvements in quality of care and, in some cases, reductions in costs. P4P programs use a variety of performance measures, including clinical processes of care and health outcomes, patient experience with receiving care, and structural indicators such as health IT investment. Among other studies, RAND analysts have been conducting a multi-year evaluation of the largest P4P experiment in the nation.
- The largest pay-for-performance experiment in the U.S. has not yet produced substantial gains in quality. Physician organizations involved in California's Integrated Healthcare Association pay-for-performance program report increased feedback to physicians about their performance and more rapid adoption of health information technology, but no breakthrough quality improvements.
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A few studies have found that hospital pay-for-performance programs produce modest improvements in the reliability with which appropriate care is provided. However, studies of physician P4P programs show mixed results.
RAND COMPARE: Hospital Pay for Performance and Reliability
RAND COMPARE: Physician Pay for Performance and Reliability - P4P is often implemented simultaneously with other interventions (e.g., quality improvement, public reporting) making it difficult to identify the discrete effect of P4P.
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How pay-for-performance programs will affect health spending depends strongly on how the programs are designed – such as how the incentives are structured and which actions are rewarded.
RAND COMPARE: Hospital Pay for Performance and Spending
RAND COMPARE: Physician Pay for Performance and Spending -
New infrastructure is frequently required to run P4P programs. Initial investments in infrastructure could cause P4P programs to increase spending in the early years.
RAND COMPARE: Hospital Pay for Performance and Spending
RAND COMPARE: Physician Pay for Performance and Spending
Public Reporting and Transparency
One strategy for improving quality of care is to make information about the performance of hospitals, health plans, physicians, and other care providers widely available. The assumption is that individuals and organizations whose performance does not get high ratings will be motivated to improve performance in order to protect their professional reputations and their market share. RAND has conducted some of the seminal studies examining the potential link between public reporting of performance information and improvement in clinical quality of care and patient outcomes and enhanced patient experience. RAND has also played a major role in developing, testing, and implementing the Consumer Assessment of Healthcare Providers and Systems (CAHPS®) family of surveys, developed under funding from the Agency for Healthcare Research and Quality. The CAHPS surveys are the most widely used patient experience surveys in the U.S.
- Publicly releasing hospital performance data stimulates quality improvement activity, however, the effect of public reporting on effectiveness, safety, and patient-centeredness remains uncertain.
- Simply providing performance information back to physicians is not sufficient to change behavior. Multi-faceted approaches are more effective, such as interactive educational sessions, coupled with the use of local opinion leaders, and/or feedback reports.
- Work on the development of CAHPS has shown that health plan quality does matter to consumers, but convincing them to use quality information in making plan choices will take time. Other barriers to getting large segments of the population to use information about quality include limited education and reading skills, and age-related physical and cognitive declines.
