Econometrics P4P

How to Measure Physician Efficiency

Many payers are moving towards value-based purchasing programs that reward efficient physicians with additional payments and punish inefficient physicians with decreased payments.  Medicare’s Quality and Resource Use Reports (QRUR) are a step in this direction.

However, summarizing overall physician quality is a difficult prospect.  First, the types of cases each physician treats is not homogeneous, even within a specialty.  Second, within each treatment regimen, patients have different comorbities.  Third, physicians who have a single high-cost outlier case may score poorly.  If these outliers are random and largely outside of the control of the physicians, then a composite quality measure may not adequately summarize the physician’s underlying efficiency level.

To address these issues, a paper by Metfessel and Greene (2012) propose a form of a Wilcoxon rank-sum (WRS) test.  Their proposal uses Episode Treatment Groups (ETG) episode groupers to measure physician efficiency within episodes of care.  Using the WRS framework, Physicians are ranked within and then across episode types. A Z-score determines whether the physician is statistically significantly better or worse than the average physician.

By using percentile rankings rather than absolute spending levels, the authors show that the use of the WRS method produces more stable physician efficiency measures (over time) than methods currently popular.  For instance, the WRS outperforms the the observed-to-expected ratio (a.k.a., O:E ratio or “efficiency index”) where ratios greater than 1.0 indicating higher costs than an average practice pattern and ratios less than 1.0 indicating lower costs.

There are two main drawbacks of this paper.  First, the authors do not risk within an episode.  A treatment episodes is defined by the ETG, severity, treatment indicator, and pharmacy benefit status; within these cells, however, patient comoribidities are ignored.  The second main drawback of this approach is that it measures physician efficiency using percentiles rather than levels.  Thus, if a physician is very efficient for low-cost episode types, but inefficient for high cost episode types, the WRS method would estimate that the physician is of average efficiency even though in terms of total cost per person relative to expected they are expensive.  The authors admit that “Our WRS application gives the same weight to less costly episodes, such as pharyngitis, as more costly episodes, such as pneumonia.”

The Healthcare Economist has created an example of how the Metfessel-Greene framework occurs in practice and also shows a case where the WRS produces problematic rankings.


1 Comment

  1. this column is profoundly disheartening. the implication is that the less you spend, the better you are at “health care delivery.”

    i didn’t sign up to be a deliveryman. being a deliveryman is a trade, not a profession. i became a doctor to improve the life of patients, not to bring smiles to the faces of beancounters.

    for me, a big part of my job is making people feel better. one of the things i do is take time to explain what’s going on to remove the anxiety associated with fear of the unknown. for most non-medical people, the illness is a scary, unknown thing. by teaching someone the basics of the situation, they feel less anxious, which intrinsically lowers the amount of pain and discomfort they feel. lower anxiety translates to less stress hormones in their blood, including lowering sympathetic outflow, so their pulse and blood pressure improve. when the brain “notices” that the body isn’t in a state of arousal, it relaxes, and stops stimulating as much sympathetic outflow since the stress is less. this breaks the viscous cycle that all physicians see where anxiety increases pain which increases anxiety . . .

    another benefit of taking a little longer and talking to someone is that by giving them some insight into what’s going on allows them to participate in the diagnostic process. it’s much faster just to give a patient a lab slip and an order for a CT of the abdomen with oral and IV contrast (giving them a 1/2000 chance of cancer from that CT) but doing a good exam, checking a cbc and urine, and spending 5 minutes explaining peritoneal signs is safe and reasonable, also.

    unfortunately, even when billing for time-based E&M, it’s hard to see enough patients to pay the bills. my guess is that i probably spend a whole lot less on imaging than average, with outcomes (i.e., patients who don’t die of a ruptured appendix, etc.) as good or better than other primary care physicians. it would be great if there were a way for me to find out how i compare to other physicians in my community in terms of imaging, but i don’t know how.

    another thing the above column doesn’t address is how the patient feels when leaving the office. i’d guess that more than 95% of my patients are smiling, even if they got some bad news. i’d guess that they are also less stressed: their blood pressure’s better: they consume fewer lorazepam and Prilosec: is that measured in the above standards??

    i think “happy” and “healthy” are linked, and a patient who’s well-informed is both happier AND healthier.

    that’s just my 2¢ worth (tho, under today’s reimbursement systems, it’s probably only worth about 1.1¢).

    flash gordon md
    primary care

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