Hospital Pay-for-Performance [P4P] for NYC’s Public Hospitals

Posted by: Jan Blustein

According to a recent press release New York City’s public hospitals will begin to pay its MDs for meeting targets relating to health care quality and efficiency.  The targets are quite varied, and include enhanced coordination of care, reductions in readmissions, decreases in ER wait times, and reductions in length-of-stay.

Using pay-for-performance [P4P] to improve hospital care is not new.  The concept has been used by private insurers and some state Medicaid programs, and the Medicare program has long had a national demonstration project on hospital P4P.  Last year hospital P4P was extended to most US acute care hospitals, under Medicare.   Historically, incentive payments have gone to hospitals, as organizations.  But under the proposal, some of those dollars will in turn go to the physicians who work in the city’s public hospitals.

How effective has hospital P4P been?  While the evidence is mixed, it has generally has not been particularly effective in improving the quality of hospital care.  My colleague Andy Ryan and I review the evidence and discuss some of the possible reasons here.

However, the New York City approach offers a new twist: it makes MDs the direct beneficiaries of high hospital performance ratings.  Indeed, it is no coincidence that the metrics that the city’s public hospitals will use in its program are the very metrics that the hospitals will be held accountable for by Medicare and other regulatory bodies.   In other words, if the hospitals perform well, the public hospital system will receive bonuses from regulatory bodies.  Under the program that was just announced, if the hospitals perform well, that wealth will be shared with the physicians who work in those hospitals.

This is a promising and interesting approach.

On The True Measure of Success

Posted by Tony Kovner

I recently read a great article in Harvard Business Review which proposed four steps in measuring success in the organization you work for.  (To my knowledge, it is uncommon for many organizations, including health care organizations and schools of public administration, to follow these steps as part of standard practice):

– Define your governing objective.

– Develop a theory of cause and effect to assess presumed drivers of the objective. (the step that’s usually left out)

– Identify the specific activities to help achieve the governing objective.

– Evaluate your statistics (reevaluate the measures you are using to link employee activities with the governing objective (also lacking in practice).

I’m interested in learning more about organizations that carry out these steps well.  Please share your thoughts.

Suggested reading: “The True Measure of Success” HBR by Michael J Maubossin, Harvard Business Review, October 2012 page 48.

On Ineffective Governance

Posted by Tony Kovner

I recently finished teaching my seven-week MPA course in non-profit governance and came up with three recommendations as to “the main thing” in improving health care organization governance:

– Get the board to admit “we have a governance problem.”

– Appoint a team to investigate this leadership challenge and make recommendations for improving the governance process.

– Get a commitment in advance from the full board to implement the team’s recommendations

Also, the board chair and the CEO should agree that one of the areas the CEO should be accountable for is “empowering the board.”

Suggested reading: Chait, Ryan and Taylor, “Governance as Leadership” Wiley, 2005.

2011 Lewis and Jack Rudin New York Prize for Medicine and Health

Posted by Dean Ellen Schall

It was such a treat to be at the New York Academy of Medicine (NYAM) last month to see John Billings, director of the Health Policy and Management program at NYU Wagner, receive the Lewis and Jack Rudin New York Prize for Medicine and Health. The award recognizes healthcare professionals for promoting public awareness of challenges facing the New York City health community. In her opening remarks, NYAM President Jo Ivey Boufford, my predecessor as dean of NYU Wagner, described Professor Billings as “the ‘go-to’ researcher who is able to deal with public policy issues in a practical way.”

NYU Wagner has set an aspiration for our faculty—to undertake research that changes the way people think and act on important public issues. Billings’ ongoing work on the complex challenges involved in health care delivery does exactly that and does it brilliantly. While NYAM previously gave this prestigious award to medical practitioners, they now confer it on administrators, policymakers, and researchers as well. It’s especially rewarding to see an academic honored for the impact his research has had on the rapidly changing landscape of health care.

After Dr. Boufford’s welcome, New York State Health Commissioner Nirav Shah introduced Professor Billings, highlighting his capacity to use analytics to solve tough problems. He said, “If it takes great analytics, John is probably involved.”

Billings’ talk, “Population Health: Improving Health of Vulnerable Populations,” documented inequalities and disparities in health outcomes. He addressed the need for structural reform to create incentives, including financial ones, to motivate the various actors in the healthcare system so that we address the needs of vulnerable populations more effectively.

The luminaries in New York’s health care world were well represented and served as an impressive testament to John’s impact and reputation. It was particularly moving to have Jack Rudin there. Jack and the Rudin family are preeminent civic leaders and have supported so many important causes and institutions, including NYU and NYU Wagner, so generously.

Professor Billings’ speech was an indication of why so many students so eagerly line up to take his classes. He asks tough questions, challenges the status quo, and brings sophisticated analytics to bear on issues that go to the heart of some of our biggest challenges.

Ellen Schall is Dean and Martin Cherkasky Professor of Health Policy and Management at NYU Wagner

In the Journals: Obesity and Diabetes

Posted By Jan Blustein

Many of us believe that our neighborhood environment affects our health.  However, proving that this is so — and quantifying the environment-health link — is difficult.  That’s because we in some sense “choose” where we live.   Those who are able to live in healthy environments may have other advantages (such as healthier, better educated parents).  Those who live in less healthy neighborhoods may be otherwise disadvantaged.

An article in the October 20th issue of The New England Journal of Medicine tries to isolate the effect of neighborhood environment from neighborhood “choice.” Authored by economist Jens Ludwig and colleagues, the study draws on the experience of thousands of low-income families that participated in an experiment run by the Department of Housing and Urban Development (HUD) in the early 1990’s.  Called “Moving To Opportunity” [MTO], the experiment allowed families to enter a lottery in which some received housing vouchers that would allow them to move to low-poverty neighborhoods, while others did not receive vouchers.  The families have been followed by a set of research teams for more than a decade.

Ludwig and his colleagues looked at rates of obesity and diabetes – two conditions that are strongly linked with poverty and poor neighborhoods.  Not surprisingly, they found that families that had received vouchers lived in better-off neighborhoods.   However, they also found that adults in those families were somewhat healthier.  While there was no difference in obesity in by voucher status (BMI >= 30; 57.5% for the voucher group and 58.6% for the no voucher group), there was a significant difference in extreme obesity (BMI >= 40; 14.4% for the voucher group and 17.7% for the no voucher group), and diabetes rates (16.3% for the voucher group and 20.0% for the no voucher group).

While this tends to confirm our impression that neighborhood environment matters, it doesn’t tell us how environment affects health. Wealthier neighborhoods may offer healthier food options, contact with healthier peer role models, or less stress.  What is perhaps most striking about the experiment is the relatively small magnitude of the effects.  Rates of obesity and diabetes are high in this low-income sample, regardless of the opportunity afforded by the voucher. Health is a complex and cumulative outcome, and neighborhood is but one contributing factor.

Ludwig J, Sanbonmatsu L, Gennetian L, Adam E, Duncan GJ et al.  Neighborhoods, Obesity and Diabetes — a Randomized Social Experiment.  The New England Journal of Medicine.  2011:365:1509-19.

 Jan Blustein, Professor of Health Policy and Medicine at Wagner, teaches courses in statistics, program evaluation, and research methods. Her own research focuses on the dynamics underlying differences in health and health care among older Americans with chronic illnesses.   She can be reached at


Medicaid Health Homes – The New York Story – Part 1

Posted by Professor John Billings

New York, like most states, is moving rapidly to implement a new initiative to provide care coordination/management to high risk Medicaid patients.  Stimulated by the 90-10 federal match rate that was established in the Patient Protection and Affordable Care Act, the New York Health Home Initiative is initially targeted at more than 700,000 Medicaid recipients who have at least two chronic conditions or a serious and persistent mental health condition.  In 2009, New York spent more than $8.7 billion for these patients, and the goal of the initiative is to improve health outcomes and reduce costs through improved care management and coordination that lowers rates of hospitalization and emergency department use.

In New York, the Medicaid program will pay a monthly fee to a “Health Home” to manage and coordinate care for each qualifying patient.  The fee is expected to range from about $50-$350 per patient per month depending on the level of risk as determined by the patient’s CRG acuity score and predictive modeling on the risk of a hospital admission in the next 12 months.  As currently envisioned, for patients enrolled in managed care, the fee will paid to the managed care plan where the patient is enrolled, and the plan will determine where the “Health Home” will be located and how the care coordination fee will be distributed.  For fee-for-service patients, the state has asked for submission applications from providers interested in qualifying as a Health Home, and the state will assign patients to a Health Home based on prior outpatient utilization patterns (based on a “loyalty” analysis), or based ED/inpatient use or geographically for patients with no recent outpatient utilization.  The program will be implemented in three phases beginning with 12 counties (including Brooklyn and the Bronx) in January, 2012, with an additional 14 counties expected in April, 2012, and the remaining 35 counties expected in June, 2012.  For further information on New York’s plans, see:

From a policy perspective, this initiative and its roll-out are of significance along multiple dimensions.  First the level of interest among providers has been enormous – the State received more than 200 letters of intent for applications to become a Health Home, with more than 90 in New York City alone.  Of course, with new money on the table in a time of Medicaid cutbacks, perhaps that’s not all that surprising.  But of more policy import is the extent to which the letter of intent process generated an unprecedented level of dialogue among medical, behavioral health, and social service providers, many of whom had no prior history of interaction.  Again, perhaps this is not so surprising – these are complex patients, with multiple conditions, often with a history of substance abuse or mental illness, many with housing problems, and many isolated with little or no social support structure.  Some potential applicants went solo or brought and handful of providers and community based organizations together.  But most applicants listed scores of medical provider organizations, behavioral health providers, social service providers, and other community based organizations, with four from New York City listing more than 100 organizations coming together for a potential Health Home application.

On one level, watching this diverse group of providers crawl out of their silos and begin to talk about what would be needed to coordinate the health and social needs was quite exciting.  But it also demonstrates the extent to which the current “system” is fragmented, with little integration within the medical care sector, but also little existing coordination (forget integration) between and among medical care providers, behavioral health providers, and community based organizations interested in the health and welfare of this vulnerable population.

This response also illustrates some of the challenges facing prospective Medicaid Health Homes (and the rest of health care services for that matter).  What will it take to be successful?  Optimally Health Homes would have the following capabilities and characteristics:

  1. A multidisciplinary approach for individualized needs assessment and care planning for participating patients;
  2. Integrated/organized/coordinated health and social service delivery system;
  3. Some sort of care/service-coordinators/arrangers, with a reasonable caseload size, a clear mission (to improve health and to reduce costs), an ability to engage and build trust with the patient, and a capability of respond to non-medical issues/needs
  4. Core IT and care coordination support capacity to track patient utilization in close to real time and to mine administrative data to help target interventions/outreach, provide feed-back to participating providers, and to examine utilization patterns that will allow continuous improvement and re-design intervention strategies;
  5. Ability to provide real time support at critical junctures, including ED visits (to help prevent “social admissions”, hospital discharge (to help develop effective community support/management planning), and or patient initiated contact for help for an emerging crisis; and
  6. Incentives/reimbursement policies to encourage and reward “effective and cost efficient care”, most notably to reduce hospital admissions and ED visits.

And how much of this currently exists?  How much is achievable in the short run?  Well, items 1 and 3 seem do-able.  The care coordination fee can help support the needs assessment and the costs of care coordinators.  The rest, not so much.  The biggest challenge will be coping with the fragmented medical, behavioral health, and social service delivery non-system.  It’s fine to come together on a letter of intent (talk remains fairly cheap) – it’s another matter to actually function as at least a quasi-organized, coordinated “system”.  The challenges of exchanging data among the non-integrated Health Home participants will be also daunting – just sharing and updating a patient care plan is likely to be difficult for some orgnaizations.  Assuring that the care coordinator knows in real time that a patient is in the ED or about to be discharged from the hospital present much bigger challenges, especially for the 30% or more Health Home patients not currently enrolled in managed care.  Of course, when the Medicaid card is swiped, Albany knows, but getting that information to the Health Home and its care coordinator is not currently including in the planning.

And what about incentives?  Clearly hospitals have the most to lose here, since the goal is to knock out hospital and ED visits.  In a managed care world where the hospital is included in some global capitation arrangement, incentives are somewhat aligned since the hospital can share in the savings.  But that sort of arrangement is relatively rare for most of managed care, and for fee-for-service patients, it is not existent.  Some form of shared savings arrangement for the Health Home Initiative is contemplated by the State, but currently it is just that:  contemplated.  Progress here will be critical to success of the initiative.

And as to success, what do we know about similar initiatives?  Well, another important policy issue related to Health Homes is that once again we are embarking on a major initiative without much evidence that it is likely to work.  It certainly sounds good on paper – care coordination makes sense and there is plenty of evidence that a lot of hospitalizations and ED visits are preventable/avoidable.  But less is known about how to do the preventing and avoiding.  This faith-based approach to policy making is actually pretty typical for Medicaid and most of health care.  Think back over the last 10-15 years for the last great Medicaid initiative:  enrollment of massive numbers of Medicaid patients in managed care.  What did we know about the effectiveness of managed care in improving outcomes and reducing costs then?  About as much as we know now for Health Homes.  And what do we know about how Medicaid managed care has worked so far:  shockingly little on some dimensions.

What is a bit frustrating on Heath Homes is that New York currently has an initiative that looks and smells a lot like Health Homes:  the Chronic Illness Demonstration Project (CIPD).  A monthly fee is paid to six demonstration sites to coordinate and manage care for fee-for-service patients at high risk of future hospitalization.  There is even a shared savings pool for projects that actually reduce costs (after including the costs of the intervention care coordination fee).  Unfortunately, the federal funding for Health Homes came along before we know how well and for whom CIDP is working.  We are going from a demonstration with a couple thousand patients to a ramp-up that ultimately may involve more than 700,000 patients.  Pretty classic.

This is not to say moving ahead with the Health Home Initiative is a bad idea.  The State has moved forward in a refreshingly open and transparent way, trying to keep the health community well-informed and trying to respond where possible to concerns of those likely affected as it rolls out the initiative.  And new federal money is new federal money.  And more coordination can’t be a bad thing.  And getting a broad range of medical, behavioral health, and community based social services providers to work together is fabulous, and it may stimulate more lasting and broader integration or at least coordination among these providers.  Perhaps even the first baby steps toward something that feels like an Accountable Care Organization?  One can only hope.  But what is fairly certain is that things are likely to get a bit messy along the way.  With the magnitude of change required to make Health Homes work, no one will get it all right the first time.  The goal should be to learn as much as possible along the way.  And it is important the State remain flexible and make necessary adjustments as the initiative is rolled out – the speed at which the initiative is being implemented should not be allowed to foreclose opportunities to encourage more lasting and fundamental change.  But stay tuned, it will be an interesting ride.

John Billings is an Associate Professor of Health Policy and Public Service, and the director of Wagner’s Health Policy and Management Program.  His research focuses on understanding  the nature and extent of barriers to optimal health for vulnerable populations.  He can be reached at