Pay-for-Performance Challenged as Best Model for Healthcare


Pushing healthcare toward pay-for-performance models that provide financial rewards for patient outcomes might not be the best direction for healthcare, according to an article published by a duo of doctors and a behavioral economist.

“Will Pay for Performance Backfire? Insights from Behavioral Economics” posted at, questions the validity of paying for outcomes, particularly as there is no evidence yet that the model improves patient outcomes.

“You’re not actually paying for quality,” says David Himmelstein, MD, a professor at City University of New York School of Public Health at Hunter College, New York. “What you’re paying for is some very gameable measurement that doctors will find a way to cheat.”

The blog post notes that monetary rewards can actually undermine motivation for tasks that are intrinsically interesting or rewarding, a phenomenon known as “motivational crowd-out.” Dr. Himmelstein says it could focus attention on coding, rather than patients, or encourage providers to avoid noncompliant patients who will make their measured performances look bad.

“Injecting different monetary incentives into healthcare can certainly change it,” according to the article, “but not necessarily in the ways that policy makers would plan, much less hope for.”

Dr. Himmelstein says that without evidence for, or against, pay for performance, it’s difficult to say whether it will improve outcomes over the long term. Given the government push toward pay-for-performance programs—such as value-based purchasing (VBP)—he suggests physicians prepare themselves to comply. Accordingly, SHM supports policies that link "quality measurement to performance-based payment” and has created a toolkit to help hospitalists prepare for VBP, one of the most targeted pay-for-performance programs.

Even as HM moves toward adopting pay for performance as a mantra, Dr. Himmelstein believes hospitalists are in a good position to lead discussions on whether pay for performance is the only way to move forward.

“It can feel like a fait d’accompli, but things can change, and they can change rapidly,” Dr. Himmelstein adds. “The first step is to have real discussions about it. Up to now, much of the medical literature is saying, ‘It’s not working. We must have the wrong incentives.’ What if there are no right incentives?”

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