‘Pay-for-performance’ programs may need a reboot

2 min read

A new study suggests that so-called “pay-for-performance” programs—in which hospitals are financially rewarded for better patient outcomes and penalized for worse outcomes—may not be working. Ashish Jha, senior author of the study, discusses the implications.

Pay-for-performance programs have been touted as an important way to improve hospital care, but your study suggested otherwise. Did this surprise you?

We were surprised. We looked at the Hospital Value-Based Purchasing (HVBP) program, a national program that Medicare introduced in 2011, the largest of its kind in the world, under which hospital performance in a number of areas—such as patient outcomes, hospital efficiency, and patient experience of care—is tied to Medicare reimbursements. Our study focused on patient outcomes, specifically mortality. While improving outcomes is hard, we had hoped that hospitals would have taken the pay-for-performance program as a signal to improve their care. But we found that the program had no impact on mortality rates within 30 days of patients’ hospitalizations for heart attack, heart failure, or pneumonia—three conditions that are specifically incentivized under the program.

Even when we examined just the worst performing hospitals—the ones that started with poor outcomes at the beginning of the study—we found that the program had no effect on helping them improve.

In retrospect, one could argue that the results were predictable. Two other big hospital-based pay-for-performance programs, one in the U.S. and one in the U.K., have also failed to make a big impact on patient outcomes.