Pati Wheeler
There have been many different attempts to improve quality in healthcare. There are many thoughts on how to make this happen. One innovative way to do this is by providing financial incentives to physicians and to hospitals for higher quality. Many people call these pay for performance incentives. A physician does a good quality job and they get reimbursed at a higher rate than another physician. Medical errors occur and there is no payment for the services. It is thought that this will improve quality but is this really the case? Will pay for performance incentives improve care or will it increase other problems?
After doing additional research on this topic, there were found to be many benefits to providing financial incentives for good quality work. Medicare has also more recently started using pay for performance to improve quality. Prior to this, according to MedPac (2003), “All providers meeting basic requirements are paid the same regardless of the quality of service provided. At times providers are paid even more when quality is worse, such as when complications occur as the result of error.” When care was improved in physician’s office, the savings would go back to Medicare, so there was no incentive in the doctor’s office to improve protocols. However, if there are shared savings, giving some of these savings back to the doctor’s office, then there is more incentive for the practice to continue to improve.
Many insurance companies and studies have found both benefits and drawbacks to these incentives. Highmark, located in Pennsylvania has had pay for performance programs since 1993. They have provided additional physician payments for meeting certain targets, starting with just their HMO products and eventually expanding to PPOs and larger physician practices. This has shown to have benefits in cost savings and quality. According to Highmark (2006), in 2003, there was a cost savings of $22 million dollars for those members in this program, and average physician quality scores for the physicians in this program were 17 percentage points higher than overall. However, Highmark does indicate that there are few studies that show that these programs lead to better patient outcomes. Also, debates continue how they should best influence physicians, and what is the best incentive level.
An ethnographic study was done by the National Primary Care Research and Development Centre in Manchester, England to look at how financial incentives affect the practice organization, clinical autonomy and internal motivation of doctors and nurses. This study looked at two health practices that had a combined total of 20,000 patients, twelve general doctors, nine nurses, four medical assistants and four administrative staff. This study focused on three different themes, “alignment of financial incentives with professional values, concern about changes to clinical practice, and the impact of surveillance within practices.” (McDonald, Harrison, Checkland, et al, 2007). The doctors and nurses felt that the financial incentives did align with their professional values, it was just giving them an extra incentive for what they already felt they should be doing in the practice. There was some concern that some of the things that they were asked to do were interfering with their practice, such as giving structured questionnaires for certain conditions, they felt that they were focusing on the conditions rather than the patient. This was noted more primarily among nurses who had to have these checklists filled out. There were mixed feelings among the participants about being monitored by colleagues, for some it provided motivation, for others, there was some frustration and discontent. Overall, they found that these financial incentives did not impact the internal motivation of doctors, but more concern was noted by the nurses. They did note some limitations to this study, including small samples, and most of the information coming from self report of the participants.
Petersen, Woodard, Urech et al, 2006, conducted a review of several studies that were focused on the effect of financial incentives for improvements in quality. They found that there were a limited number of studies on this topic available. They did have a few conclusions from this review. When developing a financial incentive program, the design has to be done very carefully, with a lot of attention paid to what is being rewarded and for how much money. It was found that documentation improved a lot more than actual service delivery, which falsely showed more improvements than there actually were. Also, these incentives also led to adverse selection, in which providers avoided the sicker patients and would tend to work with patients that would help them meet their standards. Things to consider are: are you addressing the right goal with the incentive, what is the maximum and minimum bonus for physicians that will impact behavior, intermittent bonuses are more effective than end of the year bonuses.
Lastly, a study was reviewed that was commissioned by the office of manpower economics in England, looking at the effects of pay for performance programs. This study looked at pay for performance in a wide variety of settings, private and public, not solely in healthcare. This study found arguments for and against pay for performance. The benefits that were found were related to employees working harder, attending more professional development opportunities, and providing clear information on which outcomes are valued by society. The benefits are also in terms of retention of high performing employees and turnover of the lower performers. In terms of the case against these programs, after several bonuses have been provided the bar can be raised to make it more difficult for people to reach those incentives, which would have the opposite effect, employees may put in less effort so it appears that the task is too difficult. In addition, in the public sector, it may be harder to determine what exactly is being measured, to have clear goals and targets in mind, what is a good way to measure healthcare quality.
A concern noted also is that the financial incentives may get in the way of the internal motivation of the public sector worker, for example, the health of the patient being the primary motivation for a doctor. Internally motivated people may work better than those with external motivation. Following are some of their conclusions related directly to healthcare:
“There is limited evidence from US studies that a clinician’s response to incentives depends upon the absolute and relative size of the financial incentives as well as the relative effort required to obtain them.
UK performance measures suggest that the quality of healthcare delivery from GPs is generally very high. GPs have therefore been very successful in obtaining financial bonuses under the current performance pay scheme. However, this is against a backdrop of previously high levels of performance from GPs – so the extent to which this scheme has been successful is unclear.
Both of the UK studies looking at GPs’ response to incentives identify a small but significant proportion of doctors who may be deliberately misreporting performance measures to increase their financial rewards.
The analysis from one of these UK studies also suggests that GPs are motivated by concerns for patient health as well as financial incentives.” (Prentice, Burgess, & Propper, 2007).
After a review of several articles related to this topic, it appears that there is still a lot of debate on this subject. The information that appears to be primary is that although there are benefits and drawbacks to these financial incentives, it appears that there are more instances reported relating to the benefits. This is definitely something that needs to be given much thought before implementing these programs. The program needs to be very detailed to ensure that the appropriate goals are identified, and that the results being achieved were really the ones that were meant to be targeted.
If this is done in a thoughtful way, it appears that it can have a high return, including quality, cost effectiveness, and patient centered care.
References
Author Unknown (2006) Using Financial Incentives to Improve the Quality of Health Care. Highmark, 8, 1-6. Retrieved March 19, 2008 from https://www.highmark.com/hmk2/pdf/IB_08_Incent.pdf.
McDonald, R, Harrison, S, Checkland, K, Campbell, S.M, & Roland, M. (2007) Impact of Financial Incentives on Clinical Autonomy and Internal Motivation in Primary Care, Ethnographic Study. BMJ Journals. Retrieved March 19, 2008 from http://www.bmj.com/cgi/content/full/bmj.39238.890810.BEv1.
MedPac. (2003). Using Incentives to Improve the Quality of Care in Medicare. Report to Congress: Variation and Innovation in Medicare, 107-127. Retrieved March 19, 2008 from http://www.medpac.gov/publications/congressional_reports/June03_Ch7.pdf.
Petersen, L.A, Woodard, L.D., Urech, T., Daw, C., & Sookanan, S. (2006). Does Pay for Performance Improve the Quality of Health Care? Annals of Internal Medicine, 145(4), 265-272. Retrieved March 19, 2008 from http://www.annals.org/cgi/content/full/145/4/265.
Prentice, G, Burgess, S, & Propper, C. (2007) Performance Pay in the Public Sector: A Review of the Issues and Evidence. Office of Manpower Economics. Retrieved March 19, 2008 from http://www.ome.uk.com/downloads/Performance%20pay%20in%20the%20Public%20Sector.%20A%20review%20of%20the%20issues%20and%20evidence.pdf
