Pay-for-performance may not benefit low performing hospitals

Pay-for-performance may not benefit low performing hospitals, according to a study in Health Affairs. 

The study found that in the initial phase of Medicare’s Premiere Hospital Quality Demonstration project, a 6 year demonstration project of pay for performance for hospitals, no significant improvements were seen in low performing hospitals.  In 2006, as phase 2 of the project, the incentives were changed to encourage greater quality improvement among lower performing hospitals. 

The results showed that even with the redesigned incentives, the project benefitted the higher performing hospitals more than lower performing hospitals.  The authors state that the findings raise questions about whether pay-for-performance strategies that reward improvement can generate greater improvement among lower performing providers. 

(Sources: The Advisory Board Daily Briefing,, April 12, 2012; Health Affairs,, April 2012)