Financial incentives for hospitals show only short term benefits to patients, study finds

BMJ 2014; 349 doi: (Published 22 August 2014) Cite this as: BMJ 2014;349:g5266
  1. Adrian O’Dowd
  1. 1London

Schemes that financially reward NHS hospitals for improving the quality of care and reducing death rates seem to have only short term benefits, new research has found.

A study published in the New England Journal of Medicine found that the effectiveness of “pay for performance” schemes in UK hospitals was questionable, as schemes did not maintain their initial promise or their early success.1 A range of these programmes, which reward hospitals financially for improving the quality of care provided to patients, have been introduced in the United Kingdom over the past decade, with mixed results.

Advancing Quality, a programme imported from the United States, was introduced in the North West region of England in 2008 and was the first of these schemes to demonstrate a significant reduction in patient deaths. Under the scheme, cash bonuses were paid to the top performing hospitals to invest in further improvements to care. Previous research, conducted at the University of Manchester in 2012, showed that Advancing Quality had reduced patient deaths by 890 in the first 18 months of the policy being introduced.2

But new research, funded by the National Institute for Health Research and carried out by Manchester and Cambridge universities and Warwick Business School, followed up the initial study of 24 hospitals in the North West. For the new study, researchers looked at three conditions—myocardial infarction, pneumonia, and heart failure. They examined the deaths occurring within 30 days of admission to hospital and compared the 24 hospitals in the North West with 137 in the rest of England.

Overall, they looked at more than 1.8 million admissions and found that, for the subsequent two year period studied, the scheme’s effect on reducing deaths in hospital disappeared and that there was no further reduction in deaths in the North West from the level observed in the rest of England.

Søren Rud Kristensen of the University of Manchester, who led the study, said, “These results suggest that the benefits of initiatives such as paying for performance may be temporary. Our findings could also be explained by the decision taken midway through the programme to change the incentives from bonuses for good performance to fines for failing to achieve targets.”

Ruth McDonald of Warwick Business School, who was in the research team, added, “The results are quite ambiguous. We found that the effect was no longer present at 42 months, but then we also found improvements in related areas, where there was an improvement in the quality of care for patients not covered by the incentive scheme.

“Pay for performance schemes are being widely adopted in hospitals across the country, so it is important we understand what impact they are having.”

The heads of the scheme defended its performance, saying that the trend could be explained by the North West having started to improve earlier than other regions and achieved its most significant effect on mortality in the first 18 months, when the biggest improvements were possible.

David Fillingham, chief executive of the Advancing Quality Alliance, said, “We are keen to work with the researchers to further understand the impact of the programme over the longer term.”

Lesley Kitchen, programme director, said, “The AQ [Advancing Quality] approach of strong clinical engagement and the auditing of compliance against a ‘bundle’ of care processes is greatly improving reliability and delivering excellent care for more patients. We’re encouraged that it seems the benefits of this approach may be being seen in other conditions and areas.”


Cite this as: BMJ 2014;349:g5266


View Abstract