Healthcare Quality: we all want it, but few agree on how to define it

In this article by Tom Emerick and David Toomey, founders of Thera Advisors, we describe various ways to define healthcare quality.


In a previous article, we referenced CMS’s new provider reimbursement model, called Medicare Access and CHIP Reauthorization (MACRA), which replaces the current reimbursement formula. MACRA will include an incentive component that will replace the incentive programs in plans today, and the details of the performance criteria are being determined for roll-out in 2019. From the providers’ lens, they are faced with the need to hire more administrative resources to keep up with the tracking of their performance, and the big question is – are consumers making different choices based on the performance results of a physician or hospital? When there are over 150 different measures in place today, how is an occasional consumer of healthcare services able to assess the most important criteria in finding the right physician?

During a recent employers’ conference on the east coast, the forum featured two panels consisting of the healthplans and the providers. The panels were set in a Q&A format to enlist the leaderships’ views on various topics facing the employers, and it was a fascinating dialogue that we have attempted to capture below.

In the first panel with the execs of five major carriers, the opening question asked for a one minute overview of their healthplan’s area of focus in addressing the employers’ challenges. The responses were consistent amongst the leaders – the focus is on the individual consumer and value-based contracting. When we evolved the discussion into quality criteria and outcomes to identify high performing physicians, the leaders acknowledged that defining quality and outcomes is a challenging endeavor, and each health plan has their own formula to assess the providers’ performance. One commented that a physician practicing in the morning could be viewed as a top performer by a carrier, while that afternoon, they could be ranked as a poor performer by another, even though the physician was delivering the same process of care for all their patients. They agreed that the employers really needed to weigh in on what was important to them, so there was greater consistency in the scoring logic with the physician community.

The next panel was with the Chief Medical Officers (CMO) from the major systems and a primary care practice. There were a number of relevant learnings from this panel. There was unanimity around the frustration with the variation in the quality metrics being used by commercial carriers and CMS. One physician commented that he had never been asked for input on the quality metrics, and he was ready to engage in that discussion. The physician leaders asked for the employers to outline what was important to them, so there could be a common set of standards for the commercial market – a consistent request from the leaders of both healthcare stakeholders.

Two of the CMOs were primary care physicians, and they both acknowledged that we have not given enough attention to the resource that has the greatest opportunity to lower employers’ costs – the family doctor. The primary care physicians can build trusting relationships with employees; they can help avoid the unnecessary services being provided; and they can help educate and channel the patients into the appropriate specialist, when they are equipped with quality and cost information.

The CMO from the largest health system acknowledged that there was 30% variation (aka waste) in the way care was being delivered within the community, and there was opportunity to improve the results. If we know there is variation in care even with performance-based contracts in place, what is the catalyst to get serious on consistency? Are there any other services that you purchase with a 30% variance? Would you continue spending money for that service knowing there is wasted spend?

After the event, there was a conversation with an employer, and we discussed the employers’ opportunity to help shape and to define the quality metrics. This employer stated that he did not have experience or knowledge on how to establish criteria, and he was surprised to hear that the healthplans were looking for his guidance since he thought it was their role. When the discussion moved to their overall business, he acknowledged that their internal business units established the quality criteria in assessing their vendors’ performance.

So how do we move beyond the billboards and the marketing campaigns to understand the healthcare suppliers’ performance? Who has the greatest opportunity to drive change in a free market system? We believe the one paying the bill has the ability to drive a more consistent outcome for high quality, cost effective healthcare. Let’s recognize and reward the physicians who are delivering a six sigma approach to healthcare, so the other suppliers will be motivated to change. It’s time for employer-driven healthcare.


Tom Emerick and David Toomey are founders of Thera Advisors. Their focus is to help employers maximize their role as the purchaser of healthcare services in working with suppliers to impact their population’s health and to lower costs.


  1. Sandra Raup says:

    I’d like to see an analysis of the “30% variation” and “30% waste” that is quoted here. If this comes from the Dartmouth study and ongoing work, I don’t think those are the conclusions we can bank on. I agree that there’s way too much healthcare going on (much more than the rest of the world, and with lower life expectancy for equivalent populations) at too high a cost for what people really want to spend money on (employers and government). But I think we should look at it through a different lens. I don’t think we’ll get anywhere until we actually ration – whether it’s by limiting services available (number of hospital beds, ICU beds, ER doctors) or global budgets, there won’t be a reason to figure out how to reduce costs. People will always take advantage of open-ended entitlements because the beneficiaries of those entitlements figure out how to attract customers. There’s been too long of a history of “take on this product/service and you will save money” and the savings never occur (and no one expected them to – it was an excuse to add something more). We have to approach it as a ground-up problem to solve and get to it, not just reduce variation.

  2. Tom Emerick says:

    For starters we spend about double our peer countries in per person health spending and are getting comparatively poorer and poorer results. There are aa huge number of good books about on this. Try The Last Well Person by Nortin Hadler.

    Also you can follow the work of the Cochrane Collaboration as well.

    Thanks for reading this blog.


    Tom Emerick

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