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The Trouble With Pay-for-Performance

Philip Betbeze, for HealthLeaders Media, October 24, 2013

"Providers want to be ahead of the curve, and participate in these new payment models to get some learning experience so they'll be ready, but it's not clear that these models are in their best interest to participate in," he says.

Wanted: A More Cooperative Relationship with Payers
"Anything that's entirely voluntary won't get much momentum, and ultimately, if it's not in providers' financial interest, they'll stop participating." P4P programs are a poor motivator not only because they are limited in revenue scope, but also because they have been seen by insurers as the best they could do to influence providers to improve, he says.

"That's the reason why they're doing this," he says. "Something must be done. This is something, therefore this must be done," he jokes. "Other valid reforms are more challenging."

Ryan advocates a more cooperative relationship with payers, which includes intensive technical assistance, coaching, and learning collaboratives.

"The easiest thing for payers to do is to change how they pay, so we have this generation of P4P programs," he says. "It's hard to argue with the concept but there are so many ways it can fail, so there's some opportunity cost for policymakers and payers."

Ryan says the cost of doing less than optimal programs to improve quality is that they take away momentum and enthusiasm for programs that might be more beneficial.

"I wouldn't say we should abandon P4P, but we should think about these tradeoffs."


Philip Betbeze is senior leadership editor with HealthLeaders Media.
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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