Term: Pay For Performance - P4P

Pay For Performance is a business model that awards based the quality of performance and meeting specific goals. Also known as incentive pay, it is designed to motivate employees to put forth more effort, because they get payed on the quality of the results instead of a fixed pay based on the amount of time put in. The idea is that an employee will work harder if their paycheck depends on it.

In healthcare, P4P has been put into practice in the United States and Great Britain. This includes rewarding hospitals for using information technology and doctors for meeting immunization targets. The goal is to improve the quality of patient care, but the results have been controversial. Patients deemed "high-risk" are avoided by physicians because medical mistakes can have severe financial consequences. There haven't been many publications on pay for performance, and the results of them have been mixed.

As of studies performed in 2006, 75% of employees have at least some part of their pay determined by performance so it is argued that it should only make sense to employ this technique where poor performance can cause injury or death. Disincentives in the case of medical errors, such as taking away a doctors payment for has also been considered, but has not been implemented at any wide level as of yet.

  • Reward physicians and hospitals for meeting specific goals and targets
  • Improve the quality of patient care
  • Promote patient/physician relationships
  • Promote innovation and integration of technology to meet goals
  • Medicare implemented a program for large multi-specialty hospitals that set a hgh quality of standards for treating patients with chronic illnesses and rewarded hospitals with saving if met.
  • The California Pay for Performance Program is the largest in the world and issues report cards to medical facilities who receive financial incentives based upon quality of performance. The program is voluntary for hospitals.

Web Resources:
American Medical Association

American Medical Association
The Commonwealth Fund
Incentive Pay (pay for performance)