Physician Profiles Could Improve Health Care Quality

January 07, 1998

BALTIMORE, January 7 - A technique called Physician Profiling could go a long way toward improving the quality of health care and reducing costs in the managed care sector, according to an article in this month's edition of a magazine published by the Institute for Operations Research and the Management Sciences (INFORMS).

The article reviews a paper presented at an October INFORMS national meeting in Dallas by H. David Sherman, an Associate Professor at Northeastern University whose work has led him to study the complex world of health maintenance organizations (HMO's).

Sherman defines "high-value physicians" as those who provide high quality care at low cost. He suggests that the technique called Physician Profiling can spotlight "high-value practice patterns" by carefully measuring both the cost and quality of physician services. This in turn can help low-value physicians find the way to adopting the better practices. He concludes that quality of care can be increased, while the cost of care is simultaneously reduced by over $100 million per day.

Sherman points out that one-dimension profiling, focused on cost alone, has been used in the past to identify high-cost physicians. This technique, called economic credentialling, has been employed by managed care organizations to either penalize or eliminate high-cost physicians from their plans. According to Sherman, it was not used to help improve physician practices.

Increased focus on quality has created more interest in assessing physician quality, yet few managed care organizations have quality ratings for physicians. Quality measures tend to be incomplete, and focus on patient perceptions rather than actual outcomes. Some quality measures focus on meeting checklists for tests - government-supported HEDIS measures now used in managed care.

Sherman states that more regular physicals, more tests, and more days in the hospital do not necessarily mean higher quality care. But higher quality, even coupled with higher plan costs, can mean lower overall cost to employers through fewer workdays missed and better employee performance. The proper balance of quality and cost is key.

Another key issue is the balance between specialists and the primary care physician (PCP). This is overlooked by managed care as a key management issue, according to Sherman. A key point here is that the PCP has been recognized as controlling 80% of the cost. But the specialist manages 75% of the cost at times when those costs are really substantial.

Sherman concludes that identifying best-quality, low-cost physicians through profiling can lead to new understanding of efficient high-quality practice patterns. He further suggested a path to develop profiles that will enable HMO's to help their physicians achieve such high-quality, low-cost practice patterns.

The article appeared in the December edition of OR/MS Today, a publication of INFORMS. OR/MS Today can be viewed on-line at

The Institute for Operations Research and the Management Sciences (INFORMS) is an international scientific society with 12,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work primarily in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, the stock market, and telecommunications.

Institute for Operations Research and the Management Sciences

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