Why pay for performance may be incompatible with quality improvement

BMJ 2012; 345 doi: http://dx.doi.org/10.1136/bmj.e5015 (Published 14 August 2012)
Cite this as: BMJ 2012;345:e5015

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  1. Steffie Woolhandler, professor1,
  2. Dan Ariely, James B Duke professor of psychology and behavioral economics2,
  3. David U Himmelstein, professor1
  1. 1City University of New York School of Public Health, New York, NY 10024, USA
  2. 2Duke University, Durham, NC, USA
  1. dhimmels{at}hunter.cuny.edu

Motivation may decrease and gaming of the system is rife

In a linked article (doi:10.1136/bmj.e5047), Glasziou and colleagues highlight the tenuous nature of the evidence that financial reward systems work in healthcare settings.1 They propose that before pay for performance schemes are implemented the potential benefits and harms should be assessed. Such schemes, which aim to improve the quality and efficiency of healthcare by the use of financial incentives to encourage desirable behaviours, have been adopted as a key strategy by the NHS in the United Kingdom, Medicare in the United States, and many private insurers. The schemes are based on a basic tenet of economics and psychology: that people respond to rewards.

Beyond the simple criticism that pay for performance can’t operate on an extended time frame and that years may elapse between treatment and outcome, the concept of pay for performance in healthcare rests on flawed assumptions about medicine, measurement, and motivation. Performance based pay may increase output for straightforward manual tasks. However, a growing body of evidence from behavioral economics and social psychology indicates that rewards can undermine motivation and worsen performance on complex cognitive tasks, especially when motivation is high to begin with.

One questionable assumption underlying pay for performance is that measurements of doctors’ performance reflect their …

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