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Why a Hospital Might Shun a Black Patient

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Doctors like to do good. They also like to make money. Technically, the ways in which physicians are paid are “colorblind.” Despite this, they contribute to inequality. It’s time to fix payment models that don’t address Covid-19’s disproportionate impact on racial and ethnic minorities and don’t align with broader efforts to make health care fair.

Research shows that doctors are more likely to choose procedures and treatments that are more profitable for them, whether these are better for patients or not. For example, cancer doctors frequently recommend higher-cost chemotherapy because they profit handsomely from it. And hospitals do more of the kinds of surgeries that come with high profit margins, like hip and knee replacements and heart valve procedures, while limiting unprofitable services like psychiatry wards either by keeping only a small number of spots for patients or by simply not offering a dedicated psychiatry ward at all.

The approach used most frequently by health insurers to remedy this is to financially motivate hospitals to control costs and improve quality by tying payments to achieving these goals. The aim is laudable and some programs do benefit disadvantaged populations. The Pennsylvania Rural Health Model, for example, is a collaborative effort by Medicare, Medicaid and private health insurers to provide a fixed payment to rural hospitals each year for all the health care services they provide. Because they’re receiving a fixed payment, hospitals can worry less about which services are more profitable and instead focus on preserving access and improving care for rural populations, whose health outcomes have lagged behind those of urban counterparts.

But because a vast majority of programs that tie payment to cost and quality goals aren’t focused on disadvantaged populations, they create incentives for hospitals to avoid patients from these groups.

For example, in the 1990s, the New York State Department of Health began grading surgeons who performed coronary bypass surgery and making their report cards available to the general public. The aim was to make outcomes more transparent and to help surgeons improve. But to this day, the initiative makes it harder for Black patients to get surgery. Why? Because statistically, outcomes are generally worse for Black patients because of larger issues of systemic racism. So surgeons avoid them to protect their scores.

Or consider the Hospital Readmissions Reduction Program, which penalizes hospitals for excessive re-hospitalization. Again, the intention is noble: to discourage hospitals from skimping on care in a patients’ initial hospitalization such that the patient returns to the hospital soon after being discharged. But since people with worse living and working conditions are readmitted more frequently, hospitals that serve more worse-off racial and ethnic minorities were more frequently penalized.

There are also so-called value-based payment reforms, under which physician groups and hospitals get bonuses if patients use less health care overall but still improve their health. If a patient is hospitalized too many times or fails to get blood pressure under control, the physician group or hospital must pay a penalty — kind of like a fine. These reforms have been adopted by Medicare (because the Affordable Care Act required it) and private insurers. They have rapidly become more popular over the past decade.

While this does have its benefits, it also means that sicker patients who need more care or those who face other challenges, like not having a caregiver at home, become economically unattractive to hospitals. That’s why fewer value-based initiatives have been taken up in communities that are home to more people of color or are worse off economically. And where such initiatives are offered, patients who belong to minority populations are more likely to be shunned at the expense of better-off white ones whom doctors see as likely to have better outcomes.

With each of these types of payment models, the initial intention regarding social justice may be unclear, unknown or even aimed at promoting it. A value-based payment reform model seems as innocent as a daisy and worlds apart from the most overt forms of structural racism, such as segregated transportation or drinking fountains. Yet, far too often, such models share the consequence of systematically disadvantaging some groups, whether as a result of the design of policies or culturally ingrained behavioral patterns.

So what can be done?

First, an explicit and integral goal of all payment reforms adopted by public and private health insurers should be to reduce racial disparities in patient health outcomes. When payment is tied to the achievement of pre-defined goals, those goals should include making health care better for disadvantaged populations and more fair overall.

Second, all payment reform programs should be subject to disparate-impact monitoring. Chiefly, this entails the insurers, including the federal and state governments, measuring and documenting the extent to which access to care of structurally disadvantaged populations is affected. This should include expedited reporting and data collection to “sense” changes in health care access and quality for minority populations more rapidly.

Third, we need a complete and detailed picture of the full extent to which payment reforms are conduits, or barriers, in reducing health disparities and structural racism. Building on related work by the National Academy of Medicine and the Office of the Assistant Secretary for Planning and Evaluation, similar groups should inventory the current landscape and make concrete recommendations for action.

The expression “Money talks” is typically used to mean that those who are better off are able to get what they want and deserve. Equity-oriented payment reforms can make money talk in a different way, a way that makes physicians and hospitals see every patient’s life as equally worth saving.

Amol S. Navathe and Harald Schmidt are assistant professors of medical ethics and health policy at the University of Pennsylvania.

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