Human beings have a variety of needs. Abraham Maslow helped us understand these needs with his hierarchy of needs, which is still written of and studied. As noted in the Business Case Study, "A reward package can be designed in such a way as to enable employees to meet a full range of human needs." In other words, an employer can address the employee's needs for basic, security, group, self-esteem, and self-fulfillment needs. Because people have these needs, rewards might be tailored to fulfill these needs.
There is news out of Daytona Beach of a neurosurgeon who worked for a local hospital. The rewards package that they offered included "incentive pay." Inexplicably, he was "nearly five times as busy as other neurosurgeons." According to the Orlando Sentinel he earned as much as $1.9 million per year, and "the vast majority" of this came from incentive pay. These payments came in the thousands of dollars extra for "each procedure after a certain threshold."
The procedures? Many were spinal fusions. According to the Sentinel, this hospital charged about $80,000 for each fusion. According to the Washington Post, more than 465,000 such procedures were performed nationwide in 2011. They note that the rate of spinal fusion has multiplied "sixfold in the United States over the past 20 years." They also report that perhaps as many as half of these were unnecessary. A recent study of ten of this particular neurosurgeons' fusions were "deemed not medically necessary" by a company hired to review them. The hospital and doctor contest that finding.
The increasing volume of these procedures "has raised questions from experts about whether, amid medical uncertainty, financial rewards are spurring the boom."
If half of the 465,000 procedures were unnecessary, that is 232,500. If all of these procedures cost the reported average in Daytona Beach, $80,000, then the total spent on these allegedly medically unnecessary procedures across the country in 2011 was $18,600,000,000. Yes, that is eighteen and one-half billion dollars per year.
This is a significant amount of money by any estimation. Certainly, it is a small fraction of what is spent on medical care in this country each year, but it is still a significant amount. Is the growth in the performance of fusions a result of the incentive pay? Is there similar growth in other procedures that are subject to incentive pay? It would be very easy to figure this out, simply end the incentive pay and see if the rate decreases. If hospitals are confident that all of the surgeries are being performed because they are medically necessary, the lack of incentive pay will have no effect on their bottom line. If they are all medically necessary, they will all be performed anyway even without the incentive pay. That is what necessary means.
The monetary influence on American medicine has to be questioned. Are doctors prescribing particular medications because they are indicated, or because the manufacturer is providing incentive? If the allegations regarding spine fusions are true, is it possible that other surgical procedures are likewise incentivised? Is there another $18 billion to be saved on knee replacements, hip surgeries, etc."
Is there a healthcare instance where incentives should be allowed to influence the delivery of testing, care, or treatment? Stories like this cast doubt on the profession and the practice. Is the damage to the public faith, to the profession of medicine, worth whatever legitimate goal (whatever that is) is achieved by incentives?