New Brief Examines Pay for Performance in Nursing

Pay for performance is gaining currency with payers, policy-makers and others. But nursing has been largely ignored.

    • December 20, 2009

Two key objectives of the push for sweeping health care reform are holding down costs and driving up quality. “Pay for performance,” a demonstrated approach to accomplishing both of those goals, has gained significant traction among policy-makers and some payers. But according to the latest publication in the Robert Wood Johnson Foundation’s Charting Nursing’s Future series, “pay-for-performance initiatives related to nursing care are just emerging, largely because—while nurses are central to patient safety and quality of care—their work remains invisible to payment systems.”

The brief, Perspectives on Pay for Performance in Nursing: Key Considerations in Shaping Payment Systems to Drive Better Patient Care Outcomes, cites a 2007 literature review in which Ellen T. Kurtzman, M.P.H., R.N., assistant research professor, Department of Nursing Education, The George Washington University, found not a single example of nursing-focused incentive programs in the United States. By contrast, Kurtzman’s research identified more than 100 such programs focused on hospitals and physician practices.

“Payers recognize nurses’ importance to quality and safety,” Kurtzman explains. “The problem is that nurses are invisible in the payment system. In hospitals, for example, their work is bundled into room-and-board charges. And any change in how nurses’ time is billed would require a major overhaul of the hospital payment system.”

“Right now, we cannot compute nursing care’s economic value because it has no price and is not on the hospital bill,” adds John Welton, Ph.D., R.N., associate professor, Medical University of South Carolina. To effectively evaluate nurses’ work performance, the field needs to define nurses’ work more precisely and establish smart ways of measuring its impact.

Devising such improved systems for accounting for nurse’s economic contribution to health care is a complex task, the brief notes. As part of subsequent research, funded by RWJF, Kurtzman interviewed policy-makers, nurses and hospital executives and board members. “Prevention of poor outcomes costs money and takes time,” she says. “Payers’ recent move to incentivize hospitals for eliminating adverse events in effect rewards them for their prevention track records. And nurses should be seen and incentivized as the hospital’s army in the war against poor quality.” But her interviews revealed that few of the key stakeholders had thought about creating financial incentives for nurses, even though hospital executives are routinely awarded significant bonuses for their work.

Nurses and administrators were receptive, Kurtzman reported, but had a hard time envisioning how and whether an incentive plan would adjust for nurses’ varying expertise and length of employment, and how the subject might fare in contract negotiations with unions. They also wondered where the funding for such incentives would come from, since even small bonuses can add up quickly for the payer. Kurtzman’s research led her to identify several specific issues that will need to be addressed in designing incentive programs, including how incentives would be structured—as a bonus or a penalty, for example; whether the recipients would be an individual nurse, unit, service, or institution; and whether incentives would be in the form of cash awards, professional development funds, celebrations, or the hiring of additional staff.

Finding the Right Yardstick

Another challenge is to identify with specificity what is to be rewarded, and how it is to be measured. “The challenge, whether you look at current models or the unique approaches of private payers, is that all pay-for-performance plans are shaped by measurement. What are we measuring? Can we be consistent? What is in the provider’s control?” asks Denise Remus, Ph.D., R.N., chief quality officer at Baycare Health System.

Sean P. Clarke, Ph.D., R.N., F.A.A.N., associate professor, University of Toronto, warns of losing sight of the patient by focusing on isolated aspects of care that are easily verified but not always clearly connected to outcomes: “What would patients want to pay for if they were paying for the performance of their nurses? They would want safe, effective treatment that allows them to attain the best quality of life possible. They would be less interested in paying for narrowly defined nursing tasks.” Gerri Lamb, Ph.D., R.N., F.A.A.N., associate professor, Arizona State University and co-chair of the Steering Committee on Care Coordination of the National Quality Forum, agrees: “A critical first step toward pay for performance is to articulate what nurses do and link those activities to outcomes.”

The Keys

The brief goes on to highlight a number of essential steps to defining effect pay-for-performance initiatives for nursing:

  • Engage wisely with pay for performance, by adding to the evidence base, learning about the policy, researching and documenting implementation, and more.
  • Get broad input from nurses about the pay-for-performance system design.
  • Continue working on nursing-sensitive measures to make sure that what is measured is actually connected to what nurses do.
  • Intensively study patients and the nurse-patient relationship, by developing ways to predict which patients are at risk of hospital-acquired conditions, and providing interventions; and by getting a better understanding of the effects of nursing intensity, direct nursing costs, and nurses’ education and experience.
  • Keep pay-for-performance systems nimble so they can respond to new information, because much remains to be learned from ongoing research.
  • End the shortages of nurse faculty and nurses, and develop voluntary and mandatory programs that optimize nurse staffing and quality outcomes.
  • Develop in-house hospital incentives for excellent nursing performance, rather than simply complying with third-party payers’ systems.
  • Allow for nursing’s complexity and focus pay for performance on those outcomes for which nurses can be accountable.
  • Design value-based purchasing to raise the standard of care, incentivize teamwork and control costs.

Perspectives on Pay for Performance in Nursing: Key Considerations in Shaping Payment Systems to Drive Better Patient Care Outcomes was written by Jean A. Grace, Ph.D., senior writer, Spann Communications, LLC. Maryjoan D. Ladden, Ph.D., R.N., F.A.A.N., RWJF senior program officer, is executive editor of the Charting Nursing’s Future series, and Susan B. Hassmiller, R.N., Ph.D., F.A.A.N., RWJF senior advisor for nursing and director of the RWJF Initiative on the Future of Nursing at the Institute of Medicine, is the contributing editor. The brief is available online.