Study Finds Financial Incentives and Public Reporting Improve Quality of Care

A recent study by RAND Corp. found that performance-based accountability systems do indeed increase performance throughout the public sector, including healthcare.

The study, "Toward a Culture of Consequences: Performance Based Accountability Systems for the Public Sector," examines the use of performance-based accountability in five public sectors — child care, education, public health emergency preparedness, transportation and healthcare. Researchers found that in optimum circumstances, these systems — which link financial or other incentives to measured performance — are an effective way to provide better public services.

Within the healthcare sector, researchers found that "pay-for-performance programs," which typically include small financial incentives — frequently combined with public reporting — have modestly improved the quality of care delivered.

However, the study also found that creating an effective performance-based accountability system requires careful attention to choosing the right design for the system, which must be monitored, evaluated and adjusted as needed to meet performance goals.

The study, co-authored by 10 RAND researchers whose collective expertise spans all of the five sectors examined, makes several recommendations to developers of performance-based accountability systems, including:

  • Realize that performance-based accountability systems are not always the best option for improving performance. Designers must consider those factors that may hinder or support a system's effectiveness.
  • Determine if the performance measures are at the individual, department or organizational level.
  • Make the performance rewards large enough to matter, but not larger than the actual benefit of the improved performance.
  • Create measures that people can influence. Do not hold people accountable for problems outside of their control.
  • Implement the program in stages to allow for opportunities to modify the program as needed, and to identify and fix shortcomings in the program.
  • Monitor and evaluate the program. This is the only way to detect problems and improve the accountability system over time.
Read the RAND Corp. release on pay-for-performance.

Read more coverage on pay-for-performance systems;

- Including Specialists in Pay-for-Performance Presents Challenges

-
North Shore University Hospital Gets Highest Pay-for-Performance Reward in Nation

-
UNC HealthCare to Pay $9M in Incentives


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