Patient Reported Quality

Should doctors financial incentives be tied to patient perceptions of quality?  Some physicians are reluctant for this to happen.  Paula Chatterjee and co-authors, however, argue that patient satisfaction should play a role in how incentives tied to value-based care are measured.

Although I do not disagree with Chatterjee, it is not clear how patient perceptions of quality would not affect physician compensation.  Even if reimbursement rates were the same for all physicians, patients often find doctors they like by talking to friends or getting referrals from other physicians.  If patient satisfaction is low, your friends are not likely to refer you to that doctor; further, physicians don’t like referring patients to a specialist when the patient comes back to them unhappy.  Thus, even if patient satisfaction is not always directly tied to the reimbursement per visit or per procedure, patient satisfaction certainly affects patient volume and thus physician revenue and profitability.

It could be the case that capacity constrains mean that all physicians except the very worst can have a full load of patients since all the best physicians have long wait times for visits or procedures.  Nevertheless, at least on the margin, patient satisfaction must affect physician profitability and revenue.

One way to balance supply and demand is to allow physicians more ability to vary the prices they charge.  For Medicare patients, this would mean allowing balance billing.  Balance billing occurs when the insurance covers a flat rate, but physicians are allowed to charge a higher rate which the patient would owe out of pocket.  Physicians in this case would have an incentive to provide high quality in order to attract new patients and also to justify a high price above the minimum amount charged by insurance.

The current administratively-based measure of value is fairly crude and likely does not take into account quality.  Incorporating patient satisfaction is a good idea, but a better idea is to let patients themselves evaluate quality of care and to allow high-quality physicians to charge higher prices to make sure the market clears with fewer shortages.


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