Canadian Chaos: Medicare’s Misaligned Incentives

leafs_jerseys_2Imagine a professional hockey team where some players earned income by scoring goals, and their teammates were paid just for showing up to play for games even if they did not score.  Assume that both groups love hockey.

Imagine there are separate coaches and budgets for each group.  One coach looks after goal-paid players; the other coach looks after game-paid players.  The first coach pays players for all goals scored with a flexible budget.  The second coach pays players for time spent on the ice with a fixed budget.

Which players would:

  • Try to keep scoring goals after games officially ended?
  • Push themselves for extra goals?
  • Hold back from scoring to avoid penalty or injury?
  • Take sick days and miss the game completely?

Which coach will:

  • Want shorter games?
  • Let the other coach play in overtime?
  • Try to save money by limiting his players’ duties and time on the ice?

Welcome to Canadian hospitals.

Misaligned incentives create chaos.  Just because players wear the same jersey, does not mean they are a team.  Winning teams have aligned incentives and drive toward the same goal.

All healthcare providers and administrators want to help patients.  It’s why they entered healthcare.  But the system makes them pull in different directions.

Canadian Chaos

Nurses get paid for hours of work.

Physicians get paid for work accomplished.

Nurses get paid from the hospital budget.

Physicians bill the province.

Nurses negotiate contracts specifying duties, hours of work, benefits, and grievance processes.

Physicians negotiate contracts specifying billable services.

Instead of hiring staff, hospitals save money by making MDs do non-medical tasks.  Only Medicare would make its most skilled, highest paid workers do clerical work.

Hospitals spend money to help more patients.

Physicians earn money to help more patients.

Helping patients must be the only objective that matters in healthcare.  Incentives must be aligned towards one goal: helping patients.  All providers must be rewarded for helping patients and how well they do so.

Medicare providers wear the same jerseys, but are they a real team?

(Photo credit: GetItNext Hockey)

7 thoughts on “Canadian Chaos: Medicare’s Misaligned Incentives”

  2. Excellent analogy, But who listens. Not the accountant and bean counters that are responsible for the budgeting. OMA is supposed to be a form of union, but does not act like one. ibrahim

    1. Thanks so much for commenting!

      If enough of us start talking, the system will change. People listen if we can make it meaningful and interesting for them.

      The OMA is an association, not a union. Most of the budget gets spent on non-negotiation things like policy, patient advocacy, physician health, and member benefits. Is there something you had in mind that you’d like the OMA to do?

      Thanks again for taking the time to comment! I really appreciate it.

      Best Regards,

      Shawn

  3. Have you considered that the players on the team paid out of the so called “flexible budget” have a monopoly on deciding what players make the “team?” Perhaps the concept of team needs to be expanded to allow the inclusion of other very capable players who can also score many goals and even perhaps make a better team at a lower overhead. Aka Nurse Practitioners. Master’s prepared, expereinced, great stick handlers, scorers and fiscally aware. Time for a shake up on the bench. One team, one goal. Appropriate salaries for all!

    1. Hey Sue,

      Thanks so much for reading and commenting! I always find it interesting to hear how people measure physician influence. Medicare leaders – aka government – determine who gets on the team as seen with NP clinics, NPs in hospitals admitting and discharging patients, NPs prescribing meds, treating injuries, and more. All provider groups tend to protect their own turf as evidenced by RN distaste for RNAs and other allied health providers, specialists resisting generalists doing ‘choice’ procedures, diagnosticians fighting specialists about imaging….and on it goes.

      I heartily agree with your comment, “Time for a shake up on the bench.” I think we need to offer as much choice as possible for patients, and pay providers based on their performance, no with salaries. I hope we see NPs advocating for their own pay for performance. They could drastically decrease costs, but not if they insist on high salaries without accountability to produce.

      Again, thanks for reading and commenting! Sure appreciate it!!

      Best

      Shawn

  4. Pingback: Doctors Should Lead Medicine, Not Politicians - shawn whatley md

Comments are closed.