Paying Hospitals More For Quality Fails Test

Tom Emerick

Posted 4/05/12 on Cracking Health Costs

There has been a proposition that if we just pay providers more money to motivate better quality, good things will happen.  That has always been a dubious proposition in my view.  Then again I’ve managed over 2500 direct contracts between employers and hospitals.

The notion is that if you give more money to poor performing providers they will take better care of patients.  While that is a worthy idea to consider, I’m not so sure.  We have 40 centuries of economic history.  Empirically, we know it works better to send more patients to high performers, not more money to second-rate performers.

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