Gruen Tenders Endorsed by House of Representatives Standing Committee – Shock!

Thanks to F X Holden who took the opportunity of a recent grogblogging to point me towards the recent report of the House of Representatives Standing Committee on Health and Ageing entitled “The Blame Game: Report on the inquiry into health funding“. I’ve not checked it all out in detail yet but was very pleased to see recommendation 29.

The Australian Government support the development of hospital and clinician-based performance information systems to better inform patients about the competence of health care providers and strengthen accountability of health professionals and health service providers. Reporting systems should allow, where appropriate, for performance information to be qualified to reflect differences in the type of patients being treated. (para 9.54)

There are various ways of doing this, but the most responsive and decentralised way to do it, the way which generally allows maximum scope for innovation, is what I’ve called the Gruen Tender. How does a Gruen Tender work? (I hear you cry).

Well I’m glad you asked. A service provider seeking to win your business predicts some quantitative outcome. You’d be familiar with real estate agents telling you how enthusiastic they are about your own house’s prospects on the market and plying you with optimistic estimates. So if you were holding a Gruen Tender to decide what real estate agent gets to auction your house you ask all the agents who are after your business to predict what price they’ll achieve. Then – and this is the point – you adjust their estimate with knowledge of how optimistic or pessimistic their bids have been in the past. How do you know that? Well part of the architecture of the scheme is that such bids and their outcomes are kept in ‘real time’ on a website somewhere for just the purpose of generating general indications of service providers’ accuracy in making predictions.

The following diagram gives you the picture I hope.

How would this work for a clinical service provider? A hospital (say), would predict their chances of performing a procedure without an adverse event. Over time a system which could compare past predictions with past outcomes could also generate information from which one could adjust future predictions. The best provider would be one whose prediction (adjusted for their past optimism or pessimism) was the best. As illustrated in this table.

I’ve written it up at greater length here. And here’s a fuller Outline of Gruen Tender (pdf)

So, as George Walker Bush might say – bring them on.

This entry was posted in Economics and public policy. Bookmark the permalink.

7 Responses to Gruen Tenders Endorsed by House of Representatives Standing Committee – Shock!

  1. michael says:

    So a specialist centre that deals with people who have more severe disease will get a poor ranking. Yet more bureaucratic bullshit for doctors to deal with. No wonder hospitals employ more and more pen pushers to measure everything. What is this obsession with monitoring process? Do you really think doctors and other healthcare staff will be motivated to do better with this kind of ‘metric’? Just pay them more money, give them the right facilities and let them get on with the job.

  2. Wrong Michael. Think about it (ie the claim in your first sentence) a bit more. Each service provider gets to offer whatever ‘bid’ they think is warranted given the nature of the situation. Their ‘ranking’ in a tender is a function of
    1) the accuracy of past prognoses – whatever they are. If they get harder cases they don’t get penalised – unless their past prognoses have been unusually optimistic.
    2) their estimate of the prognosis in this particular case.

    So there’s no bias towards anyone other than those who are too optimistic in their prognoses. Over time they’ll find their further prognoses downgraded by the extent of their past optimism.

  3. michael says:

    If you want to see how league tables work in the UK read this.
    My point is that we just don’t need league tables – hospitals are already top heavy with administrators and managers auditing, measuring, reporting and regulating anything that moves. Surprised there’s any room left for the clinical staff.
    Hospitals need to be driven by the clinical needs of local communities not some statistical beauty contest. They need funding, not league tables.

  4. Michael, it’s not a proposal for league tables. Please get your mind around what the proposal is before slagging it off. Then we can have a debate about what is proposed, not something else. There is a lot wrong with the British star rating system.

  5. James Farrell says:

    I wonder if Michael, like me, is still reeling from the finale episode of Bodies on the ABC last night. But I think that the issue of quantitative performance indicators in general, and their effects on the quality of services, is in principle separate from the problem of inflated promises that Nicholas is trying to solve. Essentially he is just trying to fix an information assymmetry by devising a system that provides more information.

  6. Pingback: Club Troppo » Atul Gawande

  7. Pingback: Public Opinion

Comments are closed.