The acting inspector general's investigation into delays at Veterans Health Administration facilities points to problems so systemic that they cannot be attributed to a few bad apples. But the report does not tell us why these problems occurred.
The most likely answer is "performance perversity": Imperfect performance measures were tied to pay incentives. Such performance incentives have been portrayed as the best way to manage all kinds of public services, even as evidence of their problems mount.
According to a 2012 VHA guideline on how to evaluate performance, being "results driven" constituted half of the evaluation for VHA network directors. The only easily measurable factor listed under the "results driven" category was that patients not wait more than 14 days from their desired date for an appointment.
This 14-day target was clearly taken seriously by administrators, to the point that they appeared to have created a parallel system of recording data, according to the inspector general's report released last week. This parallel system made performance look better, but it bore little relation to reality. Schedulers reported being pressured by supervisors to enter a date when an appointment was available as the patient's preferred date, or to cancel and reenter appointments closer to the actual appointment date to minimize the official waiting time.
The result was that the official data from the Phoenix facility reported an average wait time of 24 days, with 43% of patients seen in the 14-day window. But last week's report suggests that the true average wait time was much longer — 115 days, with 84% of patients waiting more than 14 days. An additional 1,700 veterans seeking appointments in Phoenix were not even on the official waiting list.
This pattern is similar to other examples of performance perversity. Britain has used performance targets in an effort to speed up health services. One was to see admitted patients within four hours of arrival at emergency rooms. The result? Ambulances were diverted from hospitals that did not want to miss the target times, or they were forced to wait in parking lots for hours before patients could be officially admitted. Hospitals also had wait-time targets, and audits suggested widespread misreporting.
The value of any performance system depends on the quality of its data and how the data are used. When data are subject to manipulation, it's reasonable to expect negative outcomes, especially when targets are attached to strong incentives. The inspector general and the Government Accountability Office have been reporting for years that the VHA's wait-time data were unreliable, even as the data were being tied to financial rewards.
This issue is not limited to public sector providers, or even to healthcare.
Performance perversity occurs when measures imperfectly capture the desired goal for a service, and when employees feel strong external pressure to achieve the target. If employees cannot hit the target honestly, they do it dishonestly. The moral compass needed to withstand such pressures is undercut by the performance systems: Organizational psychologists have warned that pay-for-performance systems tend to "crowd out" intrinsic beliefs in the value of a task. As employees come to view their targets as unrealistic or unfair, it becomes easier to rationalize manipulating the system.
The calls for resignations make for good political thea-
ter, but we need systemic solutions to systemic problems. What are our options?
One solution is to improve the measures by spending more resources to ensure data quality. But the inspector general's report makes clear that manipulation is so deeply embedded in scheduling practices that a routine audit might miss it, and that more significant cultural change is needed.
Another solution is to disconnect bonuses from imperfect performance measures. This cuts against the grain of how we think public organizations should work. But we need public employees to believe that hiding problems will not be rewarded. Veterans would be better served when employees identify and solve these problems as a routine part of their job rather than as whistle-blowers.
Donald Moynihan is a professor of public affairs at the University of Wisconsin-Madison and a member of the National Academy of Public Administration.