Malaligned financial incentives of providers in the treatment of chronic diseases: the case of chronic heart failure.
Fee for activity based payment systems create a matrix of conflicting incentives. Hospitals, desiring to maximize revenues and minimize expenses, seek high patient volume with minimal direct variable expenses. The mix of patients, sought bias towards those whose disease related group (DRG), provide the largest contribution to hospitals fixed costs, are frequently characterized by the DRG with high reimbursements, coupled with both low length of stay and low utilization of expensive resources. Physicians, on the other hand, find hospital environments to be extraordinary practice sites. In the hospital, they can generate practice revenue without paying overhead for hospital resources. The incentives to rapidly discharge patients and reduce utilization of resources which are charged to the hospital's expense line are obscure. Hospital treatment of CHF frequently characterizes this conflict; hospitals are seeking rapid through put of CHF patients who neither require expensive hospital based resources nor demonstrate excessive length of stay. Physicians are not encumbered with immediate concerns about costs during the hospitalization, nor the length of hospitalization. The absence of absolute medical consensus on appropriateness of diagnostic and treatment strategies in this population has allowed significant variation on practice patterns to evolve, and consequently, variation on the contribution to hospital fiscal viability made by each physician. (c)1999 by CHF, Inc.
Sobotka
P A
PA
Department of Internal Medicine, Wayne State University School of Medicine, Detroit, MI.
O'Connell
J B
JB