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Judging efficiency

Compliance Monitor, March 30, 2007

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Q: Are there any independent methods to judge a physician's efficiency?

A: On March 6, 2007, the director of healthcare for the Government Accountability Office (GAO) released a report (GAO-07-567T) that said "physician profiling programs may have the potential to generate savings for health care purchasers."

GAO selected ten health care purchasers to review because these purchasers--five commercial health plans, a provider network, a trust fund, two U.S. states and one Canadian province--examine physician practices based upon efficiency. GAO focused its analysis upon general practice, internal medicine and family practice physicians. While efficiency can have many meanings, GAO defined efficiency as "providing and ordering a level of services that is sufficient to meet patients' healthcare needs but not excessive, given a patient's health status."

To profile physicians whose medical practices were inefficient, two approaches were studied. First, purchasers focused on the costs associated with treating a specific episode of illness. Second, purchasers focused on costs, within a specific period of time, associated with the patients in the practice.

The GAO report noted that CMS has the tools to identify physicians who are likely to practice medicine in an inefficient manner. As federal and state health care expenditures continue to grow and private employers pressure third-party payers to control the annual premium increases, it is likely that additional governmental and non-governmental groups will publish reports assessing the efficiencies and inefficiencies in the health care delivery system.

Thanks to Bruce Armon, Esq., a partner in the Philadelphia office of the law firm Saul Ewing, LLP for answering this question.

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