Pay-for-Performance May Backfire on Quality, Report Suggests

A pay-for-performance model in healthcare may "crowd out" intrinsic motivation for quality performance and adversely affect quality for the long term, according to a Health Affairs blog post.

The authors, two of whom are professors at City University of New York School of Public Health at Hunter College in New York City and one of whom is the James B. Duke Professor of Psychology & Behavioral Economics at Duke University in Durham, N.C., take a behavioral economics perspective of pay-for-performance in healthcare.


They point to studies showing financial incentives tend to replace intrinsic motivation and may worsen performance instead of improving it. For example, they cited a study showing college students will "spontaneously play with interesting puzzles, but once they're paid to solve them they lose interest in playing for free."

The authors argue that while financial rewards may seem an effective method for improving performance, the model does not account for other motivators of human behavior. Furthermore, there have been no large-scale randomized controlled trials indicating pay-for-performance's positive effect on quality in healthcare.

"This simple model of reward-induced performance ignores the complexity of human drive, particularly the role of intrinsic motivation — the desire to perform an activity for its own inherent rewards," the authors wrote.

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