Performance-Based Medicine: Creating the High Performance Network to Optimize Managed Care Relationships, 1st Edition (Hardback) book cover

Performance-Based Medicine

Creating the High Performance Network to Optimize Managed Care Relationships, 1st Edition

By William J. De Marco, MA, CMC

Productivity Press

294 pages | 34 B/W Illus.

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Hardback: 9781439812884
pub: 2011-12-06
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With healthcare making the transition from volume-based reimbursement programs to value-based approaches, understanding performance measurement is vital to optimize payment and quality outcomes. Performance-Based Medicine: Creating the High Performance Network to Optimize Managed Care Relationships guides readers through the maze of definitions and discussions related to value-based purchasing, healthcare delivery, and pricing. It tackles the question of how hospitals, HMOs, physician groups, and employers can arrive at an optimized reimbursement cost and coverage access decision that is attractive to consumers yet fulfills the need for a working margin.

The book begins by looking at HMOs and the three key factors—reimbursement, coordination, and performance—that have led toward performance-based contracting. Laying the foundation for clearer communication between physician hospitals and purchasers, the author defines important concepts in the discussion, from efficiency and cost effectiveness to quality. He focuses on key issues of organizational structure, management, and measuring the outcomes of quality.

Discussing pay-for-performance, the book examines programs in the US and offers case studies of countries succeeding in the development of care management. It explores options for reengineering the healthcare delivery system, among them transitional case management programs and specialist data sharing. It also covers the use of information technology in healthcare delivery.

This timely book will be of interest to managers, vendors, employers, and insurers who have tried everything to lower cost but are discovering that all care is not equal and that matching the right doctor with the right service for the right patient can be done. Helping readers build a path between where they are and where they want to be, it offers an outline of tasks to move from a disorganized collection of care components to a seamless arrangement of high-performance care-givers.

The book is directed at the senior management level for those who are learning metrics and are trying to define performance to become more sophisticated in monitoring and leveraging this vital data in a complex marketplace of contradictory terms and ill-defined outcomes.


Bill De Marco draws upon his extensive experience to provide a comprehensive and detailed discussion of performance-driven improvement in healthcare. There is much here of value to policy makers, healthcare system leaders and anyone who wishes to have an in-depth and practical understanding of how to improve healthcare performance and how to align payment to drive better performance. Healthcare continues to be in crisis and in need of further reform, and Bill helps leaders understand the steps they need to take to get that done.

—George J. Isham, MD, Chief Health Officer, HealthPartners

Real health reform must solve deep systemic problems in the delivery of medical services, not just the way we pay for care. This latest book by Bill De Marco presents a realistic and practical blueprint for fixing the system at its base. Performance-Based Medicine: Creating the High Performance Network to Optimize Managed Care, not the Affordable Care Act, should be required reading for all who really want to build a new and better health system.

—Jeff Bauer, PhD, author of Paradox and Imperatives in Health Care and Statistical Analysis for Decision-Makers in Health Care

I feel fortunate to have been given the opportunity to review and endorse Mr. De Marco’s amazing new book, Performance-Based Medicine: Creating the High Performance Network to Optimize Managed Care. This book is particularly remarkable in that it focuses not just on pay-for-performance and performance-based medicine, but truly on the provider side of innovating managed care and embracing pay-for-performance. This provider focus emphasizes physician organizations, and transitioning the delivery of actual healthcare to one that rewards clinical excellence, benchmarked performance attainment, and improving purchaser value. This focus of the managed care enterprise from the physician’s perspective, especially in the contexts of performance benchmarking and Lean engineering, is truly unique just by itself. But Bill De Marco, goes a few steps further. As we’re now seeing with the rise of state healthcare exchanges, accountable care organizations, and attempts by purchasers to narrow their provider markets according to their own metrics, Mr. De Marco has hit a "home run" with his book: He has shown how to re-engineer clinical pathways and disease processes – even with free, public-domain tools – to add value in ways that most emerging ACOs and healthcare exchanges have not yet realized how limited their value will be without moving toward value-based care and performance-based contracting. I was particularly impressed with the findings shared by Bill De Marco in describing Episode Treatment Groups® (ETGs®) and their syntheses of complex and statistically-valid disease management datasets in ways that the healthcare market is just beginning to realize. For example, I can easily see Bill’s descriptions of ETGs as transforming pharmacy benefit managers (PBMs) and Third-Party Administrators (TPAs) away from micro-managing consumption to setting clinical pathways, specific to disease states and their co-morbidities, and therein rewarding benchmark attainments and disease adaptations of specific people. This model is truly the ultimate goal of Paying-for-Performance and transitioning to Performance-Based Metrics, designed to improve clinical care, adherence to healthier lifestyles, optimal disease adaptation, morbidity and mortality prevention, as well as assurance of improved clinical outcomes – all of which purchasers (including CMS) have always wanted to buy from health plans and managed care organizations but have never been able to do so. With Mr. De Marco’s new book, Performance-Based Medicine, these market transformations can finally occur and at the broadest levels within a newly re-emerging U.S. healthcare delivery system. Great job, Bill!

—David I. Samuels, author of Managed Health Care in the New Millennium

Table of Contents


Integration and HMOs: How Did We Get This So Wrong?




Performance Measurement: A Science with No Followers

Furthering Measurement and Informed Purchasing

Reimbursement: From Fee for Service to Risk Adjusters

More Than a Trend

The Current Status of P4P

Early Pay for Performance

Decile Thresholds

More Than a Trend

The Current Status of P4P

Performance Language and Practice

Where Health Care Delivery and Information Technology Intersect

The Solution Is within Our Four Walls

Can We Get Our Terminology Correct First?

Short Term vs. Long Term



Grades and Effectiveness

Risk Adjusters and Comparative Effectiveness

Organizational Issues of Planning and Control

Quality Data

Outcomes Data

Evidence‑Based Outcomes Data

Lean Engineering

Six Sigma

Learning Organizations


Early Guidelines

Savings Estimates

Summary of Selected Savings Options

Guidelines and Episodes of Care

Grouping Bundles of Services

Value‑Based Purchasing and Performance‑Based Contracting

Setting Benchmarks and Attainment Thresholds

Small Numbers on Individual Performance Measures

What the Regulations Are Saying about Pay-for-Performance


The Pay‑for‑Performance Rumors and Issues

What Types of Performance Targets?

Cost Effectiveness


The Vision

Just Another Program

Lean Engineering

International Classification of Diseases

Web‑Based Processing

Comparative Effectiveness and Ethical Limitations

Lung Volume Reduction Surgery as a QALY Example

International Reform

Competition through Improved Performance


Getting Started

Introduction to Planning

Environmental Scan

Managed Care’s Involvement

Feasibility and First Steps

What Are We Trying to Prove?

Legal Issues That Might Affect What You Are Trying to Do

Tasks to Move toward an Integrated Care System

Feasibility Study for Nonaligned Hospitals and Physicians

Financial Steps

Planning Steps

General Issues to Avoid

Issues to Decide upon Early On

No Guarantee That Any of These Steps Will Produce a Result

The Future of Performance‑Based Medicine

Once We Have Baseline

Operating Your Performance‑Based Strategy

Episode Treatment Group

Sharing Benchmarks and Eliminating Unhealthy Conflict

Normal vs. Abnormal Conflict

Constructive Conflict

Gap Analysis as an Ongoing Operational Management Goal

Disease Grouping Connected to Delivery Systems

Patient Health Status Improvement

Building the "Front End" and the "Back End" of the Patient‑Coordinated System

Patient Health Records

Gain Sharing and Risk Management

Community‑Based Analysis versus National Standards

Payment as a Meaningful Driver of Permanent Behavioral Change for Physician and Patient

Managed Care Opportunity to Share or Suppress Data

Decision Tools and Artificial Intelligence

Building a Collaborative Model

Deinstitutionalize the Institutional Services

Moving Toward Life Sciences Approach to Managing Care


About the Author

William J. De Marco, MA, CMC, is the President and Chief Executive Officer of De Marco & Associates, Inc., a national, independent healthcare consulting firm specializing in healthcare delivery system redesign and transformation. He expanded the company’s capabilities in 2001 by forming Pendulum HealthCare Development Corporation, a health information and management services company. Mr. De Marco is recognized as a leader in the research, design and implementation of community-based health plans. He is currently involved with assisting special needs plan startups and expansions as well as other Medicare and Medicaid program development. Mr. De Marco is a well-known author having written or contributed to over a dozen books on managed care topics. He holds a master’s degree in organizational development from DePaul University. He is a past faculty member of Loyola Law School’s graduate program and was recently awarded the Follomer Bronze award from the Healthcare Financial Management Association for his outstanding service and contributions to HFMA chapters and members. He also recently authored the Managed Care Exam Study guide for certification by HFMA executives. As an accomplished speaker on a variety of topics including reimbursement, marketing and management issues, Mr. De Marco has received high marks for offering entertaining and insightful workshops and seminars. He is a regular presenter for such audiences as Medical Group Management Association, HFMA, VHA, AHA, Quorum, NMHCC and AHIP.

Subject Categories

BISAC Subject Codes/Headings:
BUSINESS & ECONOMICS / Management Science
MEDICAL / Health Care Delivery