CONSUMERS DOUBT BONUS PAY WILL IMPROVE PHYSICIAN PERFORMANCE

National Poll Addresses Trend in Physician Incentives, Patient Outcomes

Nashville, Tenn. –November 11, 2004 – As government and commercial health plans throughout the country increasingly look to physician bonus programs to help drive improved health-care quality, a national poll released today found that 70 percent of consumers don’t believe such programs would result in better quality, yet 80 percent said they would like to see a quality rating of physicians in their community.

The survey—commissioned by American Healthways (Nasdaq: AMHC) to inform this year’s Johns Hopkins/American Healthways Annual Physicians Meeting and Outcomes Summit, “Outcomes-Based Compensation: Pay-for-Performance Design Principles”— queried 1,223 adults with health insurance on a number of issues related to the topic of physician pay-for-performance. Of those surveyed, 43 percent reported having some form of chronic disease, 78 percent received their health insurance through an employer, 11 percent were covered by Medicare or Medicaid and 11 percent were self-insured. Margin of error for the poll is +/-2.9%.

According to the poll:

• 81 percent of consumers believe bonus pay for meeting additional goals or doing superior work is a good idea, but only 51 percent believe it’s a good idea when applied to physicians as compared to teachers (84 percent), line workers (89 percent) or retail sales clerks (87 percent).
• 78 percent of consumers believe that if a physician bonus program is in place, patient satisfaction should be a key measure of success.
• The most popular reason consumers cited for giving physicians a bonus was for reducing medical errors (55 percent) followed by improving the health of patients (47 percent) and teaching patients how to be healthier (46 percent).
• The underlying goal of physician pay-for-performance programs is to provide additional incentives for physicians to follow recognized standards of care that lead to improved quality and improved health outcomes,” said James E. Pope, M.D., chief medical officer of American Healthways. “Physicians, however, are not singularly responsible for improving quality or health outcomes, and any tinkering with the health-care compensation system should consider the alignment of every stakeholder, including the health-care consumer, around improved outcomes.”

In the poll, the most frequent reason given by consumers for not supporting physician pay incentives was the perception that physician incomes are already substantial. In addition, consumers believe that physicians are bound by the Hippocratic Oath to deliver quality health care and should not have to be persuaded to do so with bonus pay.

If a physician bonus program were in place, however, things that typically have a strong influence on a patient’s overall satisfaction with the physician office experience – wait times and actual time spent with the physician – rated slightly lower in importance as reasons for awarding a physician bonus pay. Some 40 percent said doctors should receive bonuses for minimizing wait time and 41 percent thought physicians should be rewarded for spending more time with their patients.

“ This poll confirms that what patients value most is a doctor who really listens to and cares about the patient. Most patients also want quality information about their doctors,” said Dr. Marie Savard, physician, author and founder of the Savard System, a library of tools to help patients become more involved in their health care. “The bottom line is that the more informed and involved a patient is in their own health care and the more they view their relationship with their doctor as a partnership, the healthier they will be. And that is the best medicine, the best ‘bonus’ if you will, that anyone could ask for.”

Frederick L. Brancati, M.D., M.H.S., professor of Medicine and Epidemiology and director of the Johns Hopkins Outcomes Evaluation Program said the survey reveals that the concept of physician incentive programs is a relative unknown for patients and physicians alike and should be approached with a healthy dose of caution and education.

“ It will be very important to involve patients in the process and to carefully communicate to them the purpose of these programs and how they will work, including what is being measured and why,” Brancati said. “Modification of physician payment should be approached with caution in order to keep the system as balanced and comprehensive as possible.”

This week, Johns Hopkins and American Healthways will bring together more than 200 physicians and health plan leaders from throughout the country as part of its fourth annual Summit to address leading issues in health care. Following the conference, a consensus report written from the physician’s perspective will be issued on pay-for-performance program design, including recommendations on measurement, reporting and patient participation.

Additional findings from the survey:

• If physicians are part of a pay-for-performance program, consumers were evenly split as to whether they should be required to inform their patients. On the other hand, 80 percent of consumers believe there should be a Consumer Reports type of rating for physicians.
• More than 60 percent of the respondents believe physicians follow best practices and established medical guidelines most of the time. However, other recent studies have found that physicians adhered to best practices only about half the time.

For a complete copy of the poll results, go to www.americanhealthways.com.

About Johns Hopkins
For more than a century, Johns Hopkins' defining health care mission has been the quest for new knowledge, leading to better health for individuals and societies. Among the world's most well known and highly regarded health care institutions, its faculty annually receives more federal funding for biomedical research than at any other U. S. university. For the past 13 years, the Johns Hopkins Hospital has received top ranking in U.S. News & World Report “Best Hospitals” surveys.

About American Healthways
American Healthways is the nation's leading and largest provider of specialized, comprehensive disease management, care enhancement and high-risk health management services proven to improve the quality of health care and lower costs. As of August 31, 2004, the Company had more than 1.3 million lives under management nationwide. For more information, visit www.americanhealthways.com.