Pay for Performance Encourages Quality Improvement

Within the health care industry, pay for performance, also known as P4P, is a method of payment that is becoming more popular both within the United States and Great Britain. Through this model of payment rewards, health care providers such as physicians, medical groups and hospitals are rewarded when certain measures of efficiency and quality are reached. This is a very different model than the most common pay for service models where healthcare providers are paid for services delivered and quality is not a contributing factor.

The pay for performance model also proposes to include a number of disincentives as part of the system. Examples of these would be not receiving payments for medical errors as well as cost increases. The goal of the pay for performance model of health care payments and rewards is to encourage an improvement in the quality of care provided as well as the efficiency of the overall health care system.

This system has been tested in a number of different health care systems including both large and small service providers. While these studies have shown some improvements within very specific circumstances, including an increase inefficiency, there has been no measurable decrease in cost. The reason for this is being linked to a higher amount of administrative tasks necessary to put the system into place. Other issues that are being seen with this model is how the quality of care is measured as well as the amount of autonomy and privacy between patients and physicians.