Killer health care policy, thanks to David Cutler

Ankur Gupta and others write,

These findings support the possibility that the Hospital Readmissions Reduction Program has had the unintended consequence of increased mortality in patients hospitalized with heart failure.

I found the article after seeing a reference in a WSJ editorial.

One of the conceits of David Cutler and health care economists who share his outlook is that technocrats can improve health care quality and lower cost by setting national standards and creating incentives for health care providers to meet those standards. But when you manage remotely, you do not necessarily manage well.

You think that high readmission rates are an indicator of inefficiency, so you tell hospitals to lower their readmission rates. They do so, and you get the “unintended consequence of increased mortality.” In your technocratic wisdom, you kill people.

Many years ago, when I heard Cutler speak on pay for performance (P4P) in health care, I was appalled.

During the Q&A at the event, I compared government trying to implement P4P in health care to trying to implement government P4P for middle management. After all, middle management in America’s big corporations and other organizations is also “hit or miss.” Yet nobody thinks that a big project to have government pay bonuses to good middle managers at Intel or General Motors would solve the problem. Even government itself does not attempt to determine the pay of individual managers in such a centralized fashion. We don’t think that people in Washington know more about your performance than the people who work most closely with you. My guess is that, using a program designed and implemented in Washington, we have about the same ability to affect the correlation between compensation and quality in medicine as we would in middle management.

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5 Responses to Killer health care policy, thanks to David Cutler

  1. Ghost of Christmas Past says:

    Who says increased mortality is unintended? The sooner people die from heart disease the less they cost Medicare/Medicaid on average.

  2. Tom DeMeo says:

    The truth is there is no good answer here. Human beings don’t always get the balance right. Almost any management controls will produce unintended consequences. The only way to make them work is with talented people managers who artfully know how to balance competing goals within the organization. There is no magic system that works with mediocre managers.

    Market forces provide a rough correction mechanism. Intel and General Motors are exposed to standard market forces. Hospitals are not. Still, it is entirely possible that such an outcome would occur in a pure market environment too.

  3. Lord says:

    This? Probably only exceeded by the conceit of those who think only individual control can produce the best results. Killing people is hardly unknown as efforts to block grant health and welfare programs to states has shown, yet abandonment of the approach. What is evident is we wouldn’t know this without the data and studies looking at this, part of those standards.

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