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How Fee-for-Service Makes Doctors Choose Poorly

Blog | 
Outcomes | 
Policy | 
System Dynamics | 

It’s not complicated. If you want doctors to stop performing or ordering low-value procedures and tests, stop paying for them. 

The reminder that providers respond to financial incentives as much if not more than medical research and continuing education comes from a new study in JAMA Internal Medicine

Researchers from the University of Michigan, University of Toronto and the U.S. Department of Veterans Affairs looked at how the use of two low-value laboratory tests for hypothyroidism changed over time in response to different incentives—clinical recommendations and payment policies. (I know you know the answer already, but humor me.) 

Low-value procedures, interventions and diagnostic tests are those that experts agree offer little or no therapeutic value to patients and, in fact, may actually harm them. In this case, the two low-value tests were screening for a vitamin D deficiency and a trilodothyonine test, which measures how much of a specific hormone your thyroid gland is producing. 

The study pool was nearly 364 million primary-care visits from Jan. 1, 2010, through June 30, 2015, by almost 51 million patients covered by either: the provincial health system in Ontario, Canada; the U.S. Department of Veterans Affairs; and commercial health plans in the U.S. The unit of measure was the number of tests ordered each month for every 100 visits over the study period.

Essentially, the test rates for the patient populations covered by each of the three financing mechanism were about the same in 2010. By 2015, the test rates either were flat or lower than expected following recommendations by the Choosing Wisely initiative that doctors stop ordering the two low-value tests. But the test rate for vitamin D screenings in Ontario dropped to virtually nothing after the provincial health system there stopped paying for those screenings at the end of 2010. That rate dropped to 0.61 per 100 monthly visits from 2.17 per 100 monthly visits.

“These findings suggest that recommendations alone may be insufficient to significantly reduce use of low-value services and that pairing recommendations with policy changes may be more effective,” the researchers said.

What’s “ya think!” in Canadian? 

As long a fee-for-service reimbursement lives, unnecessary medical procedures and testing will live. It’s that simple if you accept that healthcare is a business like any other business and responds to economic incentives the same way other businesses respond to economic incentives. 

If you want to fix healthcare, go right to the money. Don’t waste your time with anything else.

To learn more on this topic, please read “Desperately Seeking Market-Based Patient Safety Solutions and “Shining a Light on the High Risks of Low-Value Care both on 

Thanks for reading.

About the 4sight Health Author
David Burda News Editor & Columnist

Dave is 4sight Health’s biggest news junkie, resident journalist and healthcare historian. He began covering healthcare in 1983 and hasn’t stopped since. Dave writes his own column, “Burda on Health,” for us, contributes weekly blog posts, and manages our weekly e-newsletter and weekly podcast, 4sight Friday and 4sight Roundup. Dave believes that healthcare is a business like any other business, and customers—patients—are king. If you do what’s right for patients, good business results will follow. Follow Burda on Twitter @DavidRBurda and on LinkedIn.