I remain skeptical about paying for performance – ctd.

I wrote last week about another study that fed my skepticism that we can greatly improve care through quality markers. A number of you pushed back against that. But this weekend, I read a piece on the Health Affairs Blog that is worth bringing into the discussion. “Will Pay For Performance Backfire? Insights From Behavioral Economics“:

Paying for performance (P4P) has strong intuitive appeal.  Common sense and rigorous studies tell us that paying more for, say, angioplasties or immunizations yields more of them.  So paying doctors and hospitals for better care, not just more of it, seems like a no-brainer.  Yet while Medicare and many private insurers are charging ahead with pay-for-performance (P4P), researchers have been unable to show that it benefits patients.

Findings from the new field of behavioral economics may explain these negative results.  They challenge the traditional economic view that monetary reward is either the only motivator or is simply additive to intrinsic motivators such as purpose or altruism.  Studies have shown that monetary rewards can undermine motivation and worsen performance on cognitively complex and intrinsically rewarding work, suggesting that P4P may backfire.

There are a number of things in the piece worth noting. The first is that there have been not one, but two Cochrane reviews on this topic.  The first found that financial incentives might work to change some of the processes of care, but there was nothing to support the idea that financial incentives would improve outcomes.  The second found that evidence showing financial incentives worked in primary care was also lacking.

There are also some interesting ideas on why pay for performance may backfire:

Traditionally, economists have viewed extrinsic (i.e. monetary) reward as either the only motivator (Figure 1a), or as simply additive to intrinsic motivators such as purpose, altruism, mastery, or autonomy (Figure 1b).  According to this view, higher pay induces better performance. (Figures appear at the end of this post.)

But this simple model of reward-induced performance ignores the complexity of human drive, particularly the role of intrinsic motivation — the desire to perform an activity for its own inherent rewards.  Offering your dinner party host a $10 reward for cooking a wonderful meal isn’t likely to motivate future invitations.

Experimental data documents that financial incentives often “crowd out” intrinsic motivation.

In last week’s post, we saw that there were improvements long before pay for performance (or penalties for not performing) kicked in. Once they did, improvements slowed. The authors of this piece would likely argue that the program hurt things more than it helped. I don’t know if that’s true, but it’s worth thinking about.


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