Menus Subscribe Search
X-ray of a skull

Performance Pay Comes to the Hospital

• December 03, 2012 • 4:00 AM

Schools and Wall Street—and now Obamacare—use it, but does pay-for-performance make for better health care?

Goldman Sachs CEO Lloyd Blankfein is into it. So are education secretary Arne Duncan and Gawker editor A.J. Daulerio. Policy wonks champion it, charter school teachers embrace it, and professional athletes cash in on it. In our data-driven age, “performance pay” is the Next Big Thing. The logic is seductive: collect numbers, cut them up six different ways, and let a computer decide who’s worth how much. No favoritism, no bias, no human mess. The winners rise to the top, the losers don’t, and the whole system improves as a result of the competition.

Now, thanks to the Affordable Care Act, performance pay is coming to a hospital near you. Under a system that went into effect in October, the Medicare funds of some 3,500 U.S. hospitals are pegged to a dozen different metrics, including patient experience and outcome. The hospitals will lose a percentage of their usual federal dollars, with the opportunity to earn it back for showing improvement. The top performers can earn back more than they lost—not unlike a Christmas bonus—while the underachievers have to live with the financial hit.

The only question is, when it comes to medicine, does pay-for-performance actually work? Two recent studies, both in the New England Journal of Medicine, go in search of answers and arrive at different conclusions.

The more recent research, from a team of British physicians, looks at performance pay and patient mortality in 24 hospitals across northwest England. Using data from the National Health Service, the authors compared survival rates in the 18 months before a program was implemented with patient outcomes after it went into effect. Would a competitive, pay-for-performance schema encourage doctors to work harder, and smarter, to keep their patients alive?

The researchers found that, when adjusted for risk factors, 30-day mortality in the test hospitals dropped 1.3 percentage points, with significant gains especially among patients with pneumonia (less so among patients with heart failure and cardiac arrest). Over the year-and-a-half study period, these improvements equated to some 900 lives saved. The pay incentives seemed to work.

England’s program was modeled on a 2003 trial, known as the Hospital Quality Incentive Demonstration, conducted in the U.S. by the Centers for Medicare and Medicaid Services. But, as the authors are quick to point out, the British version was both better funded and more amply supported than its American predecessor, which likely had something to do with its success. In England, the hospitals were only rewarded for improvements—not penalized for failures—and administrators at competing care centers sat down regularly to share lessons learned. Bonuses were twice as large as they had been under the American HQID, and twice as many were handed out. In other words, the prizes felt real—and attainable.

The British findings stand in stark contrast to the results of the HQID trial itself, which appeared this spring in the Journal.

Under the six-year HQID, which ran in 252 hospitals across the country, more than six million patients underwent bypass surgery, or were treated for pneumonia, heart failure, or heart attack. Researchers from Harvard’s School of Public Health compared those patients’ outcomes—as evidenced by 30-day mortality—with control data from more than 3,000 non-pay-for-performance hospitals. They found that, between 2003 and 2009, survival rates at performance-pay centers did not differ significantly from standard hospitals. Whatever financial incentives might have done to improve patient experience and clinical care, they didn’t save lives.

The authors called the evidence “sobering” and noted that the performance-pay program mandated by the Affordable Care Act and drawn up the federal government looks an awful lot like HQID.

As of October 1st, of course, the point is moot. Whatever the data say, performance-pay is now a cornerstone of American Health Care 2.0. Don’t expect a cure-all.

Kevin Charles Redmon
Kevin Charles Redmon is a journalist and critic. He lives in Washington, D.C.

More From Kevin Charles Redmon

A weekly roundup of the best of Pacific Standard and PSmag.com, delivered straight to your inbox.

Recent Posts

August 29 • 8:00 AM

Why Our Molecular Make-Up Can’t Explain Who We Are

Our genes only tell a portion of the story.


August 29 • 6:00 AM

Strange Situations: Attachment Theory and Sexual Assault on College Campuses

When college women leave home, does attachment behavior make them more vulnerable to campus rape?


August 29 • 4:00 AM

Forgive Your Philandering Partner—and Pay the Price

New research finds people who forgive an unfaithful romantic partner are considered weaker and less competent than those who ended the relationship.


August 28 • 4:00 PM

Some Natural-Looking Zoo Exhibits May Be Even Worse Than the Old Concrete Ones

They’re often designed for you, the paying visitor, and not the animals who have to inhabit them.


August 28 • 2:00 PM

What I Learned From Debating Science With Trolls

“Don’t feed the trolls” is sound advice, but occasionally ignoring it can lead to rewards.


August 28 • 12:00 PM

The Ice Bucket Challenge’s Meme Money

The ALS Association has raised nearly $100 million over the past month, 50 times what it raised in the same period last year. How will that money be spent, and how can non-profit executives make a windfall last?


August 28 • 11:56 AM

Outlawing Water Conflict: California Legislators Confront Risky Groundwater Loophole

California, where ambitious agriculture sucks up 80 percent of the state’s developed water, is no stranger to water wrangles. Now one of the worst droughts in state history is pushing legislators to reckon with its unwieldy water laws, especially one major oversight: California has been the only Western state without groundwater regulation—but now that looks set to change.


August 28 • 11:38 AM

Young, Undocumented, and Invisible

While young migrant workers struggle under poor working conditions, U.S. policy has done little to help.


August 28 • 10:00 AM

The Five Words You Never Want to Hear From Your Doctor

“Sometimes people just get pains.”


August 28 • 8:00 AM

Why I’m Not Sharing My Coke

Andy Warhol, algorithms, and a bunch of popular names printed on soda cans.


August 28 • 6:00 AM

Can Outdoor Art Revitalize Outdoor Advertising?

That art you’ve been seeing at bus stations and billboards—it’s serving a purpose beyond just promoting local museums.


August 28 • 4:00 AM

Linguistic Analysis Reveals Research Fraud

An examination of papers by the discredited Diederik Stapel finds linguistic differences between his legitimate and fraudulent studies.


August 28 • 2:00 AM

Poverty and Geography: The Myth of Racial Segregation

Migration, regardless of race, ethnicity, gender, or sexuality (not to mention class), can be a poverty-buster.


August 27 • 4:00 PM

The ‘Non-Lethal’ Flash-Bang Grenades Used in Ferguson Can Actually Be Quite Lethal

A journalist says he was singed by a flash-bang fired by St. Louis County police trying to disperse a crowd, raising questions about how to use these military-style devices safely and appropriately.


August 27 • 2:00 PM

Do Better Looking People Have Better Personalities Too?

An experiment on users of the dating site OKCupid found that members judge both looks and personality by looks alone.


August 27 • 12:00 PM

Love Can Make You Stronger

A new study links oxytocin, the hormone most commonly associated with social bonding, and the one that your body produces during an orgasm, with muscle regeneration.


August 27 • 11:05 AM

Education, Interrupted

When it comes to educational access, young Syrian refugees are becoming a “lost generation.”


August 27 • 9:47 AM

No, Smartphone-Loss Anxiety Disorder Isn’t Real

But people are anxious about losing their phones, even if they don’t do much to protect them.


August 27 • 8:00 AM

A Skeptic Meets a Psychic: When You Can See Into the Future, How Do You Handle Uncertainty?

For all the crystal balls and beaded doorways, some psychics provide a useful, non-paranormal service. The best ones—they give good advice.


August 27 • 6:00 AM

Speaking Eyebrow: Your Face Is Saying More Than You Think

Our involuntary gestures take on different “accents” depending on our cultural background.


August 27 • 4:00 AM

The Politics of Anti-NIMBYism and Addressing Housing Affordability

Respected expert economists like Paul Krugman and Edward Glaeser are confusing readers with their poor grasp of demography.


August 26 • 4:00 PM

Marching in Sync May Increase Aggression

Another danger of militarizing the police: Marching in lock step doesn’t just intimidate opponents. It impacts the mindset of the marchers.


August 26 • 3:03 PM

The Best Reporting on the Federal Push to Militarize Local Police With Riot Gear, Armored Vehicles, and Assault Rifles

A few facts you might have missed about the flow of military equipment and tactics to local law enforcement.


August 26 • 2:00 PM

How the Other 23 Percent Live

Almost one-fourth of all children in the United States are now living in poverty, an increase of three million kids since 2005.


August 26 • 12:00 PM

Why Sports Need Randomness

Noah Davis talks to David Sally, one of the authors of The Numbers Game: Why Everything You Know About Soccer Is Wrong, about how uncertainty affects and enhances the games we watch.


Follow us


Subscribe Now

Young, Undocumented, and Invisible

While young migrant workers struggle under poor working conditions, U.S. policy has done little to help.

Education, Interrupted

When it comes to educational access, young Syrian refugees are becoming a “lost generation.”

No, Smartphone-Loss Anxiety Disorder Isn’t Real

But people are anxious about losing their phones, even if they don’t do much to protect them.

Being a Couch Potato: Not So Bad After All?

For those who feel guilty about watching TV, a new study provides redemption.

How Gay Men Feel About Aging

Coming to terms with growing old can be difficult in the gay community. But middle-aged men are inventing new strategies to cope.

The Big One

One in two full-time American fast-food workers' families are enrolled in public assistance programs, at a cost of $7 billion per year. July/August 2014 fast-food-big-one

Copyright © 2014 by Pacific Standard and The Miller-McCune Center for Research, Media, and Public Policy. All Rights Reserved.