The Problem with Pay-for-Performance (P4P)

New York Times journalist Dr. Aaron E Carroll does a nice job in his July 28, 2014 article describing the industry’s disappointment that a seemingly good idea (paying doctors more money for achieving a goal) yields disappointing results (improvements of 4-6% per metric, if at all, rather than 40-60%).  Let’s go deeper … let’s ask why P4P Quality payments in and of themselves fail to achieve the magnitude of improvement in healthcare outcomes our country needs.

#1 First, Determine the Underlying Problem(s) Causing Underperformance of the Clinical Care. Seldom is the problem a failure of physician motivation to do the right thing for the patient.  So adding more “motivation” (in the form of money) is unlikely to produce breakthrough improvements in outcomes between doctor and patient.  The doctor might focus more personal effort upon those clinical goals associated with monetary incentives, but likely at the expense of other equally important outcomes without incentives attached, achieving no net improvement for the practice. And as I’ve written before (What Role, Money”), autonomy, mastery and purpose are more effective than money at producing discretionary effort among physicians.

#2 Next, Formulate Solutions to those Problems. Discretionary effort is indeed an important component for creating improvement in healthcare outcomes, but other components more so.  The dominant reasons for disappointing rates of improvement have to do with lack of (1) systematic improvement infrastructure (systems of measurement, comparison, accountability to colleagues, process improvement), (2) culture of patient safety and team-based care, and (3) blending the promise of medical informatics to the complexities of healthcare delivery.

#3 Finally, Improvement Activities Should be Centrally Coordinated, but Peripherally Empowered.  A hundred points of simultaneous improvement, each using common methods and validated approaches, creates faster tempo of improvement across a healthcare system than a hierarchical top-down approach of control.

Some will undoubtedly assert that P4P’s disappointing results are due to providing inadequate levels of monetary rewards to physicians, but that point of view doesn’t jive with my observations and experiences, nor the research from Daniel Pink and others (see Dr. Carroll’s article for additional information).  We need to think beyond money (P4P) if we are to increase the tempo and magnitude of improvement in healthcare.

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