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The Trouble With Pay-for-Performance

Philip Betbeze, for HealthLeaders Media, October 24, 2013

The author of a study on pay for performance in healthcare, says there is little evidence to support that incentives for following certain processes that have been proven to add value… actually improve quality or value.

Payers have for years tried to impart a sense of accountability to healthcare providers through financial incentives, yet inefficiency and poor outcomes still plague the healthcare system.

The way the majority of healthcare is paid for is a chief culprit. Fee-for-service healthcare provides virtually no incentive for coordination of care and perversely rewards waste.

This is not a new problem, but it defies easy solutions.

Payers have tried to imparting some performance expectations and measurement tools into healthcare payment through so-called pay for performance programs that offer incentives for following certain processes that have been proven to add value, and they should make a difference, as logic dictates.

The problem, says the author of a study on pay for performance, is that this kind of logic may not apply in healthcare, at least not at the levels currently in place.

One of the more widely used tools in a thin toolbox that payers use to modify behavior among service providers has been so-called P4P incentives. Insurers have relied on them for years to better coordinate care, eliminate waste and improve processes. But do they work?

We don't really know, says the study's author. While there's widespread evidence that providers do respond to such incentives, says Andrew Ryan, an associate professor of public health with the Weill Cornell Medical School, there's little evidence that such incentives actually improve quality or value, which are, after all, the goals.

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1 comments on "The Trouble With Pay-for-Performance"


Stefani Daniels (10/28/2013 at 3:46 PM)
First of all, the incentive/penalty cycle should not be directed at hospitals. Under that scenario it is presumed that the hospitals can control/influence medical practice and history has proven that its a hard nut to crack in the current culture. Second, the only strategy that has reaped real change over the years is transparency of data/outcomes. The literature if filled with studies on how hospitals and physicians have changed culture and processes when they know that the outcomes will be viewed by the payers and the rest of the world. Just look at NY State - until they published mortality data associated with open heart surgery, people were dying too frequently. Now, its quite a different story. Published physician specific data and they will change too