Pay-For-Performance Incentives May Backfire Among Safety-Net Hospitals
The same government-backed incentive programs
aimed at improving the care all Americans receive in hospitals may be
widening the gap between poor, underserved patients and those who are
insured or can afford to pay for their own care, according to a new
study led by a University of Pennsylvania School of Medicine physician.
"Though public reporting and pay-for-performance
are designed to improve quality of care, the smallerperformance gains
at safety-net hospitals will be very harmful to these hospitals,
damaging their reputations and finances," said lead author Dr. Rachel
M. Werner, assistant professor in Penn’s Division of General
Internal Medicine. "Ultimately, this could widen existing disparities
between hospitals, with rich hospitals getting richer and poor
hospitals becoming poorer."
Werner and her colleagues from the University of
California at San Francisco analyzed how well "safety-net" hospitals
– facilities that serve large populations of low-income,
minority and Medicaid patients – delivered care compared to
The findings, published in JAMA, show that
safety-net hospitals had significantly smaller gains in care
improvement over time, and were less likely to be among the top-ranked
facilities recognized for providing high-quality care.
The researchers used data from the Centers for
Medicare and Medicaid Services public reporting Web site, Hospital
Compare, to evaluate hospital performance. Since 2004, some U.S.
hospitals have received pay-for-performance bonuses based on their
record in providing recommended care for several key conditions
including heart attack, heart failure and pneumonia. Hospitals that
didn’t meet performance standards faced financial penalties.
Werner found that under this pay-for-performance
system, safety-net hospitals would have received smaller bonus payments
and been more likely to be financially penalized – a hit she
theorizes may ultimately damage their reputations and lead to cash
shortfalls that leave them unable to invest in quality improvements
like nurse staffing or information technology such as electronic health
"Many of these hospitals are already plagued by
financial problems," she said. "They are the least prepared to absorb
the hit of a financial penalty, which only puts them further behind the
8-ball for making quality improvements, and ultimately penalizing the
patients who rely on safety-net hospitals for their care."
Werner and her colleagues propose that to level
the playing field, pay-for-performance programs be redesigned to
provide bonuses each time hospitals deliver appropriate care, rather
than only when they achieve targets that may be unrealistic for their
payer mix. The researchers also suggest providing subsidies to fund
quality improvements in safety-net hospitals, a model that has already
been used successfully among some federally qualified health centers.
For more information on the University of
Pennsylvania School of Medicine, visit www.med.upenn.edu.