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Combining pay for performance with gainsharing.

Combining gainsharing with pay for performance offers the potential to deal simultaneously with the nation's healthcare quality, affordability, and profitability issues by more equitably rewarding contributions toward enhanced quality of care, increased efficiency, and reduced case costs.

Benchmarking↗

Institute of Medicine recommends new P4P system for Medicare.

IOM asserts fee-for-service program actually discourages quality improvement. Report claims jury is still out on approach; current research contains conflicting results. Ten design principles recommended for pay for performance and its implementation.

Humans↗

Making the grade with pay for performance: 7 lessons from best-performing hospitals.

Top-performing hospitals in pay-for-performance initiatives: Engage clinicians in quality improvement initiatives from the start of the planning process. Make high-quality care the priority of the executive team. Have a dedicated quality, safety, and performance improvement department. Manage data collection effectively. Regularly share performance data with their staffs. Commit to sharing best practices. Celebrate the achievements of their healthcare teams.

Financial Management, Hospital↗

Pay-for-performance options in health care.

Pay for performance is expected to become widely implemented. Two critical issues in P4P are how much money is involved and what measures of performance the programs will pay for.

Physician Incentive Plans↗

Primary care physician compensation method in medical groups: does it influence the use and cost of health services for enrollees in managed care organizations?

CONTEXT: Growth of at-risk managed care contracts between health plans and medical groups has been well documented, but less is known about the nature of financial incentives within those medical groups or their effects on health care utilization. OBJECTIVE: To test whether utilization and cost of health services per enrollee were influenced independently by the compensation method of the enrollee's primary care physician. DESIGN: Survey of medical groups contracting with selected managed care health plans, linked to 1994 plan enrollment and utilization data for adult enrollees. SETTING: Medical groups, major managed care health plans, and their patients/enrollees in the state of Washington. STUDY PARTICIPANTS: Sixty medical groups in Washington, 865 primary care physicians (internal medicine, pediatrics, family practice, or general practice) from those groups and affiliated with 1 or more of 4 managed care health plans, and 200 931 adult plan enrollees. INTERVENTION: The effect of method of primary care physician's compensation on the utilization and cost of health services was analyzed by weighted least squares and random effects regression. MAIN OUTCOME MEASURES: Total visits, hospital days, and per member per year estimated costs. RESULTS: Compensation method was not significantly (P>.30) related to utilization and cost in any multivariate analyses. Patient age (P<.001), female gender (P<.001), and plan benefit level (P<.001) were significantly positively related to visits, hospital days, and per member per year costs. The primary care physician's age was significantly negatively related (P<.001) to all 3 dependent measures. CONCLUSIONS: Compensation method was not significantly related to use and cost of health services per person. Enrollee, physician, and health plan benefit factors were the prime determinants of utilization and cost of health services.

Capitation Fee↗

Minding our Ps and Qs? Financial incentives for efficient hospital behaviour.

In this paper, the empirical evidence addressing the particular issue of how hospitals may be reimbursed is reviewed. Most forthcoming is the indeterminate effect of prospective payment systems using diagnosis-related groups as a means of controlling costs. Such systems, by controlling only the price of hospital care, remain vulnerable to compensatory increase in patient throughput, cost-shifting and patient-shifting despite hospital cost per case being reduced. Health maintenance organisations have been shown to reduce hospital costs, but their effects on patients selection and patient outcome are unclear. Selective contracting in California (similar to the U.K. Government's proposed internal market) has also been shown to reduce costs by affecting both the price and quantity of hospital care. But these effects have occurred only in areas with high concentrations of hospitals. Global and clinical budgeting (which control price times quantity) seem to offer the most potential for cost reduction whilst maintaining patient outcome. By monitoring both cost and outcome within clinical budgets it should be possible to reduce wasteful variations in health care and so establish more efficient hospital practice.

Australia↗

An incentive plan for professional fee collections at an indigent-care teaching hospital.

The authors describe the implementation and development of an incentive plan to improve professional fee collections at an indigent-care teaching hospital. They theorized that an incentive plan based on relative value unit (RVU) productivity would increase billings and collections of professional fees. Unique RVU targets were set for individual services based on the number of faculty full-time equivalents and average reported productivity for academic physicians by specialty. The incentive plan was based on the level of expected faculty billings, measured in RVUs, for each department. A "base + incentive" model was used, with the base budget being distributed monthly throughout the year, and the incentive held as a "withhold" to be paid at the year's end only if the billing target in RVUs was met. Additionally, a task force worked with physician billing office and the hospital to improve collections. In the first year after implementation of the system was in place, important increases were noted in total RVU productivity (30.5% over the previous year) and in collections (49.5% over the previous year). Sixteen of 23 departments exceeded their incentive targets, and it was possible to make distributions of professional fees to those departments, to be used within the hospital system to enhance clinical services. Moreover, the plan created an overall positive attitude toward billings and documentation of faculty activities. The authors believe that this kind of incentive plan will be increasingly important for academic faculty working in public hospital systems.

Efficiency↗