Hospitals Make Small Gains From Pay for Performance Programs

These strategies offer more government dollars when quality care targets are met

FRIDAY, Jan. 26, 2007 (HealthDay News) -- Touted as a way to improve health care quality, pay-for-performance strategies offer only small gains in hospital quality compared with standard public reporting, researchers report.

Pay-for-performance approaches offer hospitals bonuses for improvements in quality in certain areas, such as heart failure, heart attack and pneumonia.

Whether these dollar incentives will actually improve quality is not known, however. The U.S. Centers for Medicare and Medicaid Services (CMS) is currently considering adopting pay-for-performance for doctors and health plans.

"Financial incentives can be successful in changing hospital and physician behavior to accelerate the rate of quality improvement," explained study lead author Dr. Peter K. Lindenauer, from the Division of Healthcare Quality at Baystate Medical Center in Springfield, Mass., and the Tufts University School of Medicine, in Boston. "But we shouldn't have too high expectations for it until we've evaluated alternative approaches to structuring the programs, have tinkered with the size of the incentive program, and tested a different set of measures and evaluated some of the potential unintended consequences," he added.

The study findings will be published in the Feb. 1 issue of the New England Journal of Medicine.

In the study, Lindenauer's team compared improvement in 10 individual and four combined measures of quality over two years at 613 hospitals. All the hospitals reported information about the quality of care through a national public reporting initiative. In addition, 207 hospitals participated in a pay-for-performance demonstration project funded by CMS.

Small gains in quality were noted. The researchers found that the pay-for-performance hospitals had greater improvement in all combined measures of quality, including heart failure, acute heart attack and pneumonia and a composite of 10 measures.

Overall, pay for performance was associated with improvements in care for heart failure, acute heart attack and pneumonia -- ranging from 2.6 percent to 4.1 percent above hospitals that participated in public reporting only, Lindenauer said.

But one drawback to pay-for-performance was that bonuses to hospitals were based on performance relative to other institutions. This meant that most of the payments went to hospitals that showed the least improvement, but had already begun the program with higher quality scores.

On the other hand, many hospitals that showed the greatest improvement in quality didn't receive any bonus, the researchers said.

In addition, Lindenauer noted that while pay-for-performance did improve quality, the program costs more to administer than public reporting, and it isn't known whether or not the cost justifies the benefit.

And there's another potential problem -- the possibility that improved quality was limited to only those illnesses or conditions for which bonuses were paid. "We don't know whether care for other conditions could have suffered as a result of hospitals paying less attention to those conditions, to excel in the areas under study," he said. "We also don't know if the gains are sustainable if the financial incentives were to disappear."

Bonuses were relatively small, amounting to 1 percent to 2 percent of the costs for caring for patients with one of the evaluated conditions. Whether increasing the payments would make a difference isn't clear, Lindenauer said.

"In addition to the structure of the program, whether the size of the bonuses should be greater is a question that ought to be studied," he said.

Lindenauer said he's also concerned that hospitals that boost their quality to levels of 90 percent of optimum performance or more might hit a ceiling. "There is only so far you can improve if you're starting at 90 percent," he said. "So, part of the reason for the modest gains was partly an artifact that these are conditions for which Medicare and other organizations have been focusing improvement efforts on."

One expert isn't sure that pay-for-performance takes into account the most important measure of quality, namely patient outcomes.

"I am not certain that this is the best way to improve care, but it is nice to see that this is something that can make some difference," said Dr. Albert Wu, a professor of health policy and management at Johns Hopkins University School of Public Health.

Wu also believes that the measure of quality should not focus on processes of care alone. "These are measures of processes of care, not outcomes of care, which is what we ultimately care about," he said.

Moreover, a climate that really values quality improvement might not need any program, Wu said. "Hospitals that are interested in these sorts of things and have a culture that promotes quality improvement might have improvements over time, even if they were not engaged in one or both of these activities," he said.

Wu agreed with Lindenauer that a focus on a few conditions might leave care for other conditions lagging. "What about the people and diseases that don't have something that is so clearly labeled?" he asked.

"These are squeaky wheels that are getting greased by CMS, and that's good, but there are certainly other things that are not being done as much and as quickly, and that's a risk," Wu said. "Or, it may be that these institutions are doing everything better."

More information

For more on hospital quality, head to the U.S. Department of Health and Human Services.

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