Impact of performance-based budgeting on quality outcomes in U.S. military health care facilities
-
Published:2023-05-12
Issue:3
Volume:48
Page:249-259
-
ISSN:1550-5030
-
Container-title:Health Care Management Review
-
language:en
-
Short-container-title:Health Care Manage Rev
Author:
Decker Kimberly L.,Schwab Stephen D.,Bazzoli Gloria J.,Chukmaitov Askar S.,Wernz Christian
Abstract
Background
Performance-based budgeting (PBB) is a variation of pay for performance that has been used in government hospitals but could be applicable to any integrated system. It works by increasing or decreasing funding based on preestablished performance thresholds, which incentivizes organizations to improve performance. In late 2006, the U.S. Army implemented a PBB program that tied hospital-level funding decisions to performance on key cost and quality-related metrics.
Purpose
The aim of this study was to estimate the impact of PBB on quality improvement in U.S. Army health care facilities.
Approach
This study used a retrospective difference-in-differences analysis of data from two Defense Health Agency data repositories. The merged data set encompassed administrative, demographic, and performance information about 428 military health care facilities. Facility-level performance data on quality indicators were compared between 187 Army PBB facilities and a comparison group of 241 non-PBB Navy and Air Force facilities before and after program implementation.
Results
The Army’s PBB programs had a positive impact on quality performance. Relative to comparison facilities, facilities that participated in PBB programs increased performance for over half of the indicators under investigation. Furthermore, performance was either sustained or continued to improve over 5 years for five of the six performance indicators examined long term.
Conclusion
Study findings indicate that PBB may be an effective policy mechanism for improving facility-level performance on quality indicators.
Practice Implications
This study adds to the extant literature on pay for performance by examining the specific case of PBB. It demonstrates that quality performance can be influenced internally through centralized budgeting processes. Though specific to military hospitals, the findings might have applicability to other public and private sector hospitals who wish to incentivize performance internally in their organizational subunits through centralized budgeting processes.
Publisher
Ovid Technologies (Wolters Kluwer Health)
Subject
Strategy and Management,Health Policy,Leadership and Management
Reference32 articles.
1. An implementation model of performance-based budgeting: Evidence from the Iranian healthcare sector;International Journal of Productivity and Performance Management,2020
2. The impact of market and organizational characteristics on nursing care facility service innovation: A resource dependency perspective;Health Services Research,1996
3. Utilization variation in military versus civilian care: Evidence from TRICARE;Health Affairs,2019
4. Horizontal and vertical integration of physicians: A tale of two tails;Advances in Health Care Management,2013
5. Measuring success in health care value-based purchasing programs: Findings from an environmental scan, literature review, and expert panel discussions;Rand Health Quarterly,2014