Hospital Pay-for-Performance [P4P] for NYC’s Public Hospitals

Posted by: Jan Blustein

According to a recent press release New York City’s public hospitals will begin to pay its MDs for meeting targets relating to health care quality and efficiency.  The targets are quite varied, and include enhanced coordination of care, reductions in readmissions, decreases in ER wait times, and reductions in length-of-stay.

Using pay-for-performance [P4P] to improve hospital care is not new.  The concept has been used by private insurers and some state Medicaid programs, and the Medicare program has long had a national demonstration project on hospital P4P.  Last year hospital P4P was extended to most US acute care hospitals, under Medicare.   Historically, incentive payments have gone to hospitals, as organizations.  But under the proposal, some of those dollars will in turn go to the physicians who work in the city’s public hospitals.

How effective has hospital P4P been?  While the evidence is mixed, it has generally has not been particularly effective in improving the quality of hospital care.  My colleague Andy Ryan and I review the evidence and discuss some of the possible reasons here.

However, the New York City approach offers a new twist: it makes MDs the direct beneficiaries of high hospital performance ratings.  Indeed, it is no coincidence that the metrics that the city’s public hospitals will use in its program are the very metrics that the hospitals will be held accountable for by Medicare and other regulatory bodies.   In other words, if the hospitals perform well, the public hospital system will receive bonuses from regulatory bodies.  Under the program that was just announced, if the hospitals perform well, that wealth will be shared with the physicians who work in those hospitals.

This is a promising and interesting approach.

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