A follow-up Healthcare Reform Law question/answer

Yesterday I went through some common questions on the new healthcare reform law. A friend emailed with a follow-up on one of yesterday's answers:

One comment - while I'm generally supportive of the plan as first step in what will be a long road ahead, I can't help but be generally wary of "incentivized efficiency" in health care (your answer to question 1). In theory, the notion makes sense, but practically, doesn't it just result in -- to use your example -- pressure to rush surgeries, shorten hospital stays and run fewer tests?

The idea with the incentives is to guide providers into using the best practices of care providers that save money while improving outcomes, and to penalize really inefficient providers that don't actually produce better outcomes.

There was a really good article in the New Yorker about a year ago (http://www.newyorker.com/reporting/2009/06/01/090601fa_fact_gawande), which talked about how McAllen Texas, which has basically the same demographics as nearby cities like El Paso, spends $15k/year per medicare recipient, while El Paso spends about half that, with virtually no difference in outcomes.

Moreover, providers like the Mayo clinic, and the Cleveland Clinic system have pioneered ways of treating patients by using teams of doctors who communicate with each other about the patients' conditions, which tends to save tons of money when compared to the current model of sending a patient to see separate specialists who don't share information.

Another one of the incentives is to decrease medicare reimbursement rates for hospitals that annually have a higher-than-acceptable rate of in-hospital patient infections. Those infections kill an estimated 100,000 patients a year, and add a huge cost to the system by prolonging stays, requiring extra tests, medicine, procedures, etc. However, as far as a hospital's bottom line is concerned, a patient infection merely results in extra billables. This isn't to say that hospitals intentionally cause them, or even look the other way, but merely that it's not costing the hospital money, so the managers have fewer reasons to invest heavily in infection-prevention techniques. These sorts of outcome-based incentives will also militate against providers cutting corners.