1. Lockhart, Lisa MHA, MSN, RN, NE-BC

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Q: What's pay for performance and why's it important?

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A: Pay for performance refers to a model of quality improvement that reimburses healthcare organizations based on compliance with specific quality indicators. This is a way of providing financial rewards as a driver of quality and cost containment. There are three basic elements of pay for performance: performance measurement, incentive design, and transparency and consumer engagement.


Performance measurement refers to several quality care indicators that involve process, structure, and outcomes. The clinical process improvement measures are dictated by the National Quality Forum and based on national data collection systems. Structure refers to electronic medical records and the use of these systems across the care continuum, and includes other data collection tools that access outcomes such as patient satisfaction scores. Process refers to standards of care based on best practice and national benchmarking. Congestive heart failure, hypertension, and acute myocardial infarction (MI) are examples of these measures. Outcomes are the end data scores. It's important to note that the rewards system is guided by the highest frequency care choices that provide the highest return value.


When we talk about pay for performance incentives, we're referring to both financial and nonfinancial incentives. Financial rewards include reimbursement based on outcomes. If a healthcare organization has negative outcomes, the added cost of care and additional length of stay associated with a hospital-acquired condition such as a catheter-associated urinary tract infection (CAUTI) may not be reimbursed, which means a loss for the organization. Nonfinancial incentives include networking, benchmarking, and marketing when outcomes are positive.


The third piece of the puzzle-transparency and consumer engagement-involves the distribution of publishable data, such as quality outcomes and safety ratings, that are widely shared and include financial impact. Healthcare organizations are now compelled to openly display all of their data points. Consumers use these data to drive personal decisions regarding where to go and who to see.


So what's the bottom line? The goal is improvement in long-term outcomes, sustainable quality, and support of best practice. The idea that pay for performance will result in improvement across the continuum is based on the belief that to improve, you must quantify; money is a powerful motivator. However, there are healthcare providers who feel that this is merely an effort by governmental bodies and insurance companies to manipulate the system. The main reason for these feelings is the belief by some that pay for performance removes physician skill, judgment, and control from the mix.


Regardless of your impressions of pay for performance, it's been effective in lowering overall cost and length of stay, and improving outcomes, especially in specific target areas. The biggest improvements in the United States have been noted in pneumonia, acute MI, CAUTIs, central line-associated bloodstream infections, heart failure, and hospital-acquired pressure injuries. With the Affordable Care Act and further financial restrictions and incentives, it's become even more crucial for healthcare organizations to get on board with pay for performance and modify their processes and accountability.




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National Institutes of Health. Patient outcomes improved by pay-for-performance.