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Can Paying for Performance Make Quality Competition Routine?

In the health care sector, physicians' salaries have traditionally not been related to success in treating or not treating a patient. In fact, some providers end up being paid more when patients fare worse simply because more treatment equals more pay. As a result, health care leaders have called for pay-for-performance (P4P) in the health care professions to become a national priority. To date, P4P programs have emphasized process measures of quality, for example evaluating how health plans perform in breast cancer screening or cholesterol control. However, outcome measures that directly assess the results of treatment for a particular disease have now found favor among sponsors.

This article considers three theories of P4P: measurement, loyalty, and productivity. It examines how P4P might work in the health care professions compared to the legal profession and the corporate world. Simply compensating physicians using a performance metric does not guarantee that collaboration is pro-competitive from the patient perspective since insurers who develop and enforce the programs may emphasize cost savings as much as quality of care in their performance evaluations.

The authors conclude P4P for health care professionals requires delicate political and social judgments as well as scientific ones, and therefore, a substantial role for government in its implementation.