Paying hospitals for quality: can we buy better care?

Abstract

6 Review the models as a group and summarise their strength of evidence ________________ 8 Summary of conclusions of other systematic reviews __________________________________ 8Responses to specific questions on funding models ___________________________________ 8 Some general principles and considerations for the design of incentive schemes ______ 10 Summary and discussion ____________________________________________________________ 14Implications for Australia ___________________________________________________________ 15 EXECUTIVE SUMMARYThe use of financial incentives to improve performance in health care is growing, and this trend is accompanied by an expanding literature. However, evidence for the impact of such schemes remains uncertain due to inadequate research designs and poorly designed incentive schemes. To date, few reviews have focused specifically on the use of such schemes aimed at clinicians working in hospitals.This review has been commissioned by the Sax Institute as part of their Evidence Check series of reports. Its aim is to describe and examine the evidence for the effects of incentive-based funding models for hospital clinicians on performance and quality of care.The review will:• Identify the range of incentive-based funding models for the provision of clinical services; • Review each individual model identified; and • Review the models as a group and examine the strength of evidence There is a large literature in this area which is reviewed.The review is based on:• An existing overview of systematic reviews;• More recent systematic reviews;• A primary literature search; and • Grey literature, including websites.A short conceptual framework is presented to help explain the mechanisms by which changes in funding models create incentives that in turn influence behaviour and performance.Numerous models exist in the United Kingdom, United States and Australia, but there is little rigorous empirical evidence of the effectiveness of changes in funding models for clinicians in hospitals. Those studies that do exist show mixed results, with the more robust studies showing no effect of pay-for-performance targeted at hospitals. One key reason suggested in the literature was that the additional funding was paid to hospitals. There were few reports as to whether and how this funding had been distributed to clinicians or clinical units within hospitals. The way the hospital uses the funds is crucial to the success of such schemes in improving performance and quality of care.What remains to be implemented and evaluated is a scheme that uses pay-for-performance to reward hospitals, combined with a mechanism that distributes the performance funding directly to clinical units and clinicians.Pay-for-performance schemes for hospitals include the Premier Hospital Quality Incentive Demonstration (US), the Commissioning for Quality and Innovation payment framework (UK), the Advancing Quality initiative (UK), best practice tariffs in Payment by Results (UK), and the Clinical Practice Improvement Payment Sys...

Pricing for safety and quality in healthcare: A discussion paper

“…The unintended consequences of such a funding scheme are significant and commonly include; inclination for organisations to select the easiest patients, to underreport target conditions and to reduce scrutiny of non-target conditions [3,18]. To guard against hospitals selecting the easiest patients, IHPA has commissioned expert advice on risk adjustment to ensure that hospitals treating high risk patients are compensated accordingly [5].…”

“…Regarding variability of reporting, IHPA will provide direction to states and territories to support programs to audit medical records and coding as referenced above [5]. Quantifying the implications on non-target conditions is uncertain [18]. However, robust reporting should identify deteriorations in non-target areas and appropriate feedback from ICPs could potentially mitigate this situation.…”

Appropriateness of care: why so much variation

“…Financial incentives are another approach. In the Supplement, Hall and van Gool report disappointing evidence that financial incentives improve quality, and note possible unintended effects through gaming or patient selection 11 . Moreover, complex Australian health care financing arrangements make it difficult to share the economic benefits of reductions in practice variations among the various stakeholders.…”