Pay-for-performance (P4P) saves lives - and constitutes a profit motive for hospitals that do best in a P4P program.

Those are the main conclusions of a white paper released last week by powerhouse group purchasing organization (GPO) Premier (San Diego/Charlotte, North Carolina) and the Centers for Medicare and Medicaid Services (CMS). The white paper serves to document the results of what is termed a "groundbreaking" P4P Hospital Quality Incentive Demonstration (HQID) project and indicates that economic incentives to hospitals translate to better outcomes for patients.

Perhaps the most striking bit of data in the white paper is that the study reported 235 acute heart attack (myocardial infarction) patients saved "as a result of quality improvements in that related focus area" of the program.

Myocardial infarction was one of five areas studied in the report, the others being heart failure, community acquired pneumonia, coronary artery bypass graft and hip and knee replacement.

Better clinical performance had a payoff for the hospitals that did the best in this project.

CMS awarded $8.85 million in Medicare incentives to the hospitals that were judged as "top performing."

The pay-outs were based on the following formula: Awards were granted to the top 10% of hospitals in a given clinical area, with an additional 2% bonus on their Medicare payments for patients in that clinical area. Hospitals in the second 10% receive a 1% bonus.

The white paper reported that five hospitals performed with the top 20% for all five areas in which they participated in year one. They are:

• Hackensack University Medical Center (Hackensack, New Jersey) and McLeod Regional Medical Center (Florence, South Carolina), the top performers in all five areas.

• Fairview Lakes Regional Medical Center (Wyoming, Minnesota), placing in the top deciles for the three clinical conditions in which they participated.

• Bone and Joint Hospital (Oklahoma City), and Presbyterian Hospital of Allen (Allen, Texas), performing in the top deciles for the one clinical focus area in which they participated.

Participation in the study by Premier, an organization that banners its primary value proposition as similar to that of P4P - improved economics for hospitals - raises a key question concerning conflict of interest.

Obviously ready to field that question, Hunter Kome, spokesman for Premier, emphasized the transparency of the data used and the minority, but significant, participation by hospitals that are not members of the Premier purchasing group.

The methodology used in the study has been posted on Premier's web site, he told Medical Device Daily, thus allowing an examination of how the study was pursued.

Altogether, 250 hospitals participated in the demonstration project, with Kome noting the wide distribution of these hospitals from all parts of the country. Specifically, hospitals in 38 states participated.

That data indicates improved performance in all five of the sectors studied in the program, tracking several quality standards in each (from four in the treatment of heart failure to nine in the treatment of myocardial infarction - a total of 34). These quality standards, according to Premier/CMS, are both national and "widely accepted."

Improvements were as follows:

• from 87% to 91% for patients with AMI;
• from 65% to 74% for patients with heart failure;
• from 69% to 74% for patients with community acquired pneumonia;
• from 85% to 90% for patients with coronary artery bypass graft;
• from 85% to 90% for patients with hip and knee replacement.

Average improvement across the clinical areas was 6.6%, and the white paper notes that these performance gains "outpaced those of hospitals involved in other national performance initiatives."

It said also: "The range of variance among participating hospitals is also closing, as those hospitals in the lower deciles continue to improve their quality scores and close the gap between themselves and the demonstration's top performers."

"Results from the first year show significant improvement in the quality of care in all measured clinical areas," said Denise Remus, PhD, vice president of Clinical Informatics at Premier, Clinical Informatics being Premier's lead player in developing the database information.

The project, launched in the fall of 2003, also includes, according to the white paper, "public recognition for top-performing hospitals as well as financial penalties for hospitals that do not improve above a pre-defined quality measure threshold by the third year of the project." The amount of financial penalties was not described.

And, according to the white paper, "Premier's relationship with participants enabled implementation of effective, collaborative knowledge transfer programs supporting identification and dissemination of best practices of top performers," calling this "a key component to the rapid pace of performance improvement."

"This white paper was issued to ensure that the public and others within healthcare have detailed information about how these hospitals are being evaluated and rewarded," said Stephanie Alexander, senior vice president for Premier. "The clinical indicators, evaluation methodology and other aspects of this project are entirely transparent and based on the best clinical evidence available today."

"Premier, like the hospitals participating in HQID, is committed to the improvement of clinical quality and patient outcomes and has been so since our inception," said Richard Norling, president and CEO of Premier. "Consequently, quality and leadership throughout the hospital structure played an integral role in the outstanding clinical performance results of these hospitals."

Premier's Healthcare Informatics unit offers performance measurement, benchmarking, and reporting products and related advisory services and methodologies to support health systems' and hospitals' quality improvement efforts. Among its products and services, Premier Healthcare Informatics offers the Advisor Suite of clinical and operational performance measurement and reporting solutions; best practice methodologies to directly implement quality improvement programs; project-specific guidance; and on-site expertise to support improvement of clinical outcomes and efficiency of care. Areas of expertise include JCAHO and CMS performance measurement, clinical and operational benchmarking, labor management programs, balanced scorecards, patient satisfaction, evidence-based research, and patient safety.