Paying for Performance

Abstract

Deficiencies in quality arise in health systems around the world. A common yet largely unproven response is “pay for performance” (P4P), which links performance targets to financial rewards. Of particular note among P4P’s myriad problems, specifying challenging targets may demotivate low-performers and reward existing high-performers without significant improvement, and low targets are likely cost-ineffective. Trade-offs arise also in defining reward magnitude, as larger rewards may be powerful but more susceptible to adversely impacting unrewarded measures. Quality improvement should prioritize patient outcomes, but difficulties in attribution impede linking rewards to clinical outcomes. Superior performance requires a multifaceted approach that nurtures clinical and managerial skills, while fostering professionalism and pride in high quality care. Some providers have improved outcomes substantially without P4P incentives for clinicians, by emphasizing a collaborative leadership culture and evidence-based practice. Unless intimately entwined with such factors, P4P may flounder.