Beyond the efficiency index: finding a better way to reduce overuse and increase efficiency in physician care

Current strategies for addressing health care costs stress physician performance measurement and commonly use an efficiency index (EI). During seven years of conducting individual practitioner pay-for-performance (P4P), we found that using EIs hindered our work on reducing overuse of services. This paper offers an alternative approach through the identification of variation in key cost drivers. As proof of concept, we apply this model to hypertension care. We then describe a project that decreased apparent overuse of fiberoptic laryngoscopy among otorhinolaryngologists. Focusing directly on reducing overuse improves cost efficiency without the barriers imposed by EI methodology.