Impact of Pay for Performance on Improving Health Care Provision

For many years, healthcare industry leaders and policy makers have joined the call to pay healthcare providers different amounts based on variation in the quality of their services as determined through their achievement on quality performance measures. Proponents of these pay-for-performance systems in health care assert that current payment systems are typically neutral with regard to differences in quality, and that pay-for-performance (P4P) programs could help improve the quality of care while they also help to control the rate of growth in health care costs. Additionally, P4P has been touted as a mechanism that can accelerate the rate of adoption of health information technology and electronic medical records, and promote the delivery of more preventive services. This study analyses P4P schemes and the factors that need to be considered when designing and implementing efficient P4P systems in health care. It first discusses the foundation of P4P systems and then addresses how they function. The study then explores their strengths, potential shortcomings and unintended consequences.Further, the study makes recommendation for countries that wish to adopt P4P.