Does Medical Care Have A GIPS?

In Massachusetts, a New Idea for How to Pay - WSJ.com:

"Under the new system, doctors and hospitals would be organized into groups responsible for all of a patient's health-care needs. The groups would receive a 'global payment' per patient, which could be adjusted with performance incentives based on the quality of care provided."

My question is a simple one - how will "quality of care" be measured? I see all sorts of difficulties in setting up performance measures. Two of the bigger ones are the presence of an indepedent standards-setting organization and a way to stave off the worst instincts of selection bias in choosing patients for the initial benchmark.

Investment performance measurement has the CFA Institute and the Global Investment Performance Standards to address the former and a set of requirements and recommendations to deal with the later i.e. inclusion/exclusion rules, specific ROR calculation methods, verification, etc. This framework provides investors with the confidence their potential asset manager is doing all it can to adhere to the highest standards in the investment industry.

Whether this model can be replicated within a universal healthcare coverage setting is debatable. To the extent it can be will determine the overall success of such a plan.

Why Annualizing Partial Returns Fails

Tilting at Windmill Jobs - WSJ.com:

"...it's worth recalling that Mr. Obama's economists predicted late last year that the stimulus would keep the jobless rate from exceeding 8%. That was a percentage point and a half ago."

The CFA Institute's Global Investment Performance Standards prohibits firms from annualizing return data for periods less than one year. One need only see a 1% weekly return presented as a potential 68% annual return to see why.

In the real world, annualizing returns for partial periods is no different than trying to predict the future. And no matter how smart a firm's investment team has demonstrated itself to be, nobody can predict the future with reliability.

Unfortunately for the real world, their are no GIPS reporting and presentation standards for politicans. I've often wondered though, whether a politican with a CFA needs to adhere to the Code of Ethics.