The Department of Health and Human Services decided to tie reimbursement rates to hospitals to patient satisfaction.

The result was happier but sicker and deader patients:

When Department of Health and Human Services administrators decided to base 30 percent of hospitals’ Medicare reimbursement on patient satisfaction survey scores, they likely figured that transparency and accountability would improve healthcare. The Centers for Medicare and Medicaid Services (CMS) officials wrote, rather reasonably, “Delivery of high-quality, patient-centered care requires us to carefully consider the patient’s experience in the hospital inpatient setting.” They probably had no idea that their methods could end up indirectly harming patients.

Beginning in October 2012, the Affordable Care Act implemented a policy withholding 1 percent of total Medicare reimbursements—approximately $850 million—from hospitals (that percentage will double in 2017). Each year, only hospitals with high patient-satisfaction scores and a measure of certain basic care standards will earn that money back, and the top performers will receive bonus money from the pool.

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In fact, a national study revealed that patients who reported being most satisfied with their doctors actually had higher healthcare and prescription costs and were more likely to be hospitalized than patients who were not as satisfied. Worse, the most satisfied patients were significantly more likely to die in the next four years.

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As a Missouri clinical instructor told me, “Patients can be very satisfied and dead an hour later. Sometimes hearing bad news is not going to result in a satisfied patient, yet the patient could be a well-informed, prepared patient.”

We don’t need to market incentivize healthcare, we need to take the market out of healthcare.