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Developing more accurate and actionable information about the comparative value of performance by providers of care can help lower persistently high rates of growth in health care spending, while improving the uneven quality of the health outcomes they produce. "Value" may be assessed in various ways, but it most commonly involves the degree to which health care services are delivered in a way that is effective (higher quality) and efficient (lower total cost of care).

Initial rounds of performance measurement have focused more on the quality of care delivered within larger organizations (such as hospitals and medical groups) than on how efficiently good care is delivered by individual physicians. Nevertheless, the rising burden of health care costs has spurred growing interest in improving the "value for money" efficiency of all providers. Yet many physicians resist individual attribution, which suggests that methods to precisely measure quality and cost differences are not sufficiently developed.

The responses of government officials and regulators have been mixed. At times, they have encouraged measurement efforts and the market forces underlying them; at other times, they have emphasized protecting the public, or providers, from what they believe may be inadequate methodologies. We illustrate these issues with a review of the case for performance measurement, as well as recent developments in the area most prone to conflict: individual physician performance measurement. We then attempt to draw some lessons from this unsettled area of policy.

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Thomas P. Miller is a resident fellow at AEI. Troyen Brennan is executive vice president and chief medical officer of CVS Caremark in Woonsocket, Rhode Island. Arnold Milstein is chief physician at Mercer Health and Benefits and medical director of the Pacific Business Group on Health in San Francisco, California.