25 perverse incentives and stupid things in health care services
1) Penalising doctors by deducting test costs from their fees. In Poland family doctors have to pay for lab tests out of their consultation fee. Result? Massively lower number of commissioned tests. Stupidity scale 10. Easy to fix: 3 (calls for more money)
2) Incentivising doctors to carry out tests In Switzerland family and specialist doctors can carry out their own lab tests in their consulting practices. Result? Many more tests! Stupidity scale 10. Easy to fix: 3 (doctors will demand compensation for lost test income)
3) Paying similar prices for alternate treatments, one of which is far more complex In the UK dentists get paid the same amount for root canal as for dental extraction. Result? A massive shift towards dental extraction and away from time-consuming root canal. Stupidity scale 9. Easy to fix: 2
4) Fragmented and opaque procurement in the UK and many other countries health authorities generally purchase medtech independently. Result? Massive price differences for the same product, a marked unwillingness for trusts to share their prices as they think they confer “competitive advantage” and the duplication of procurement teams across several hundred organisations. Stupidity scale 10. Easy to fix: 6
5) Paying for a product and not for associated service delivery Home care operators are still paid as distributors of medical goods. Result? Services which accompany the product are unvalued ancillaries. Stupidity scale 10. Easy to fix: 6
6) Setting inpatient DRGs much higher than outpatient rates In Germany DRGs for outpatient surgery are set so low that hospitals fight to do as much work as possible inpatient. Result? Failure to move expensive inpatient work to the outpatient arena and low levels of ambulatory surgery. Stupidity scale 10. Easy to fix: 7
7) Letting judges adjudicate all overactivity claims from insurers and other payors In Brazil attempts by health insurers to query overactivity often lead to legal cases. Insurers say that judges side with doctors 99% of the time, making it impossible to eliminate overactivity. Stupidity scale 9. Easy to fix: 9
8)Rewarding hospitals for prescribing drugs In China and many other emerging markets hospitals receive half their income from the resell of drugs leading to massive overprescription and overtreatment, with doctors given prescription targets. Whilst a recent Chinese law outlawed the practice, reimbursement levels have not been reformed and so the practice continues there. Doctors in many Emerging Markets have similar targets. Stupidity scale 10. Easy to fix 8.
9) Failure by insurers to seriously query bills or to report doctors for fraud Common across the world, particularly in the Middle East, India, Brazil and sometimes within the private hotelier hospital sector across Europe. Failure by insurers to seriously query bills or to report doctors for fraud leads to massive overtreatment and “the ATM business model” in which operators set out to systematically max out insurance policies. Stupidity scale 10 Easy to fix: 6 (but getting easier as AI is deployed).
10) Demands that chronic disease management programmes should be assessed as stringently as drug approval with double blind trials. This applies everywhere. Result? Leads to failure to adopt such programmes and so to massive extra treatment costs. Stupidity scale 6 Easy to fix: 5
11) Siloing services means an operator can not provide a low cost and effective holistic service Everywhere siloing in medicalised homecare means that it is all but impossible for operators to develop a holistic service which offers payors a complete menu ranging from the supply of oxygen through to nursing and product supply. Result? Leads to inefficient, expensive services which do not meet the needs of patients. Stupidity scale 9 Easy to fix: 7
12) Pharmacies offer cut-price primary care consultations Common in the USA, Mexico and Emerging Markets. Result? The consultations are paid for by systematic overprescription. Stupidity scale 9 Easy to fix: 6
13) Hospital groups buy primary care networks to increase referrals Germany, Emerging Markets. Result? Primary care doctors in these facilities are likely to refer patients more frequently, leading to unnecessary and expensive overtreatment. Stupidity scale: 9 Easy to fix: 3
14) Patients are allowed to go directly to specialist doctors. All statutory insurance systems and many PMI systems. Result? Danger of over- and wrong treatment. Stupidity scale 6 Easy to fix 9
15) Allowing the private sector to cherry pick activities which are overly high margin or operations which pay a lot. Almost everywhere. Result? Poor value for money, but what do you expect entrepreneurs to do if you put cherries in front of them? Stupidity scale: 10 Easy to fix: 5
16) Failure of international policymakers to share information on remuneration and tariffs. Result? Massive discrepancies in prices paid for medical procedures and tests. Stupidity scale: 10 Easy to fix: 4
17) Silos between social and acute care. Result? Patients stay in expensive hospital beds far longer than they should. Stupidity scale: 10 Easy to fix: 3 (Just start charging overstays in hospital beds to the municipalities as is now done in Sweden after three days. Although this led to spectacular failures in Covid)
18) Highly complex, property-focused PPPs/PFIs where costs extend forward for decades. Emerging markets and UK. Result? Massive over-expenditure, a focus on property assets rather than effective service delivery, big consultancy fees and massive corruption. Stupidity scale 8 Easy to fix: 5
19) Failure of hospitals to outsource medical service functions such as dialysis, labs or imaging to expert operators. Everywhere. Result? Costs are 5-20% higher than they should be. Stupidity scale: 8 Easy to fix: 9
20) Failure to deploy large-scale competitive tenders with strong built-in quality standards Everywhere. Result? Overpayment on standard tariff terms.Stupidity scale: 9 Easy to fix: 6
21) Surgeons with long NHS/public sector waiting times get more private practice so they don’t have an incentive to be efficient in their NHS practice. UK and all hotelier models Stupidity scale 10. Easy to fix 5.
22) Bribing doctors and nurses from low and middle income countries to come and work in rich countries. When the doctors are coming from African countries this is going to cost lives in their home countries. Stupidity scale 10. Easy to fix 3.
23) Failure to spend adequately on preventive healthcare Most countries spend 2-3 percent of their healthcare budget on preventative health care measures such as tobacco, alcohol, food and exercise messages, yet these programmes deliver huge long-term gains. Instead, the money is spent on expensive and complex treatment for people with poor life styles. Stupidity scale 10, easy to fix: 3
24) Failure to ensure that complex patients make it to university hospitals where they can best be treated by experts In countries such as Germany patients whose treatment is profitable for their local hospital will be retained there as long as possible rather than being referred to experts. Stupidity scale: 10 easy to fix 3
25) Failure of wealthy countries to spend enough training nurses and doctors for their nation Instead they actively seek out and hire desperately needed personnel from poor countries. Stupidity scale 10 Easy to fix: 2.
