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Will financial incentives and penalties improve hospital care?

BMJ 2010; 340 doi: (Published 22 January 2010) Cite this as: BMJ 2010;340:c88
  1. Alan Maynard, director1,
  2. Karen Bloor, senior research fellow2
  1. 1York Health Policy Group, University of York, York
  2. 2Department of Health Sciences, University of York
  1. Correspondence to: A Maynard akm3{at}
  • Accepted 13 December 2009

The effects of pay for performance schemes on healthcare systems are still unclear. Alan Maynard and Karen Bloor argue that the English NHS should proceed cautiously in implementing such schemes

Policy makers around the world are seeking to increase the productivity of health services and there is enthusiasm for using financial incentives to improve clinical and organisational behaviour. In England, the NHS quality and outcomes framework in primary care quickly reduced variation in practice activities.1 Following on from this a new commissioning for quality and innovation payment framework (CQUIN) is being introduced to improve the quality of care in hospitals and other healthcare organisations.2 Its not yet clear, however, whether incentive schemes, particularly those aimed at improving the processes of care, will result in improved patient outcomes and so justify the cost of implementing them.

Current financial incentive schemes

The NHS quality and outcomes framework is an innovative example of a system which provides incentives to clinical teams. It attaches points to target levels of achievement on processes of care and clinical indicators of health outcomes. Rewards are linked directly to the number of points achieved.

Although the framework produced rapid changes in behaviour, particularly with respect to improvements in processes,1 the system is costly. Total annual expenditure on the scheme is around £1bn (€1.1bn; $1.6bn), and the relation between some of its performance targets and population health improvements has been questioned.3 Evidence is also emerging that setting targets for some areas may have reduced performance in other areas of the service.4 Overall, the health outcomes may not have been sufficient to justify the substantial opportunity cost of the system.

The new scheme that is being introduced for NHS hospitals, the commissioning for quality and innovation framework,2 will also offer rewards for meeting targets based on process …

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