Episode-based physician profiling: a guide to the perplexing.

Most current strategies to improve quality and efficiency in health-care delivery focus on measuring and improving physician practice. A new "second generation" of physician profiling--episode-based profiling--is moving beyond legacy "first-generation" physician profiles based on population health and preventive services measures. Episode-based profiling measures physician practice at the "episode of care" level with sophisticated analytic methods and tools using data from claim and other administrative data sets, and it has an underlying "theory of change" consistent with the evolution of the US health-care marketplace. While offering potential advantages in informing consumer choice and enabling practice improvement, episode-based profiling also has limitations and challenges, both analytically and in the process of physician engagement and improvement. Nonetheless, episode-based profiling is likely to continue to spread and have growing influence, and it has significant implications for research, policy, and clinical stakeholders.