Pay For Performance: Are Hospitals Becoming More Efficient in Improving Their Patient Experience?
When I joined AMS nearly 2 years ago, I was finishing my doctoral research that examined the impact of CMS’ Pay for Performance (P4P) system on the relationship between hospital costs and the patient experience. This P4P system provides a financial reward or penalty for hospitals that will reach as high as 2% of Medicare revenues based in part on HCAHPS performance.
The July-August 2015 Journal of Healthcare Management published the research results that show that everything else being equal, higher costs facilities tend to have higher percentages of patients who rate the hospital in the “top box” for the overall rating of hospital measure. This was true across all three years of data in the study (Stanowski, Simpson, & White, 2015).
The second finding was unexpected, but far more powerful. Hospitals are becoming more efficient in delivering higher levels of patient experience. To make this happen, it is assumed that hospitals are investing resources in programs and services more carefully, ensuring that they are more likely to produce higher levels of quality.
While at AMS, I have seen a growing number of hospitals that use our gainsharing program begin to condition physician incentive payments partly on HCAHPS performance. The approach enables hospitals to share cost reductions with physicians if physicians meet HCAHPS performance targets. By incenting costs effectiveness with quality, hospitals using gainsharing are leading in the value creation paradigm.
While the bulk of my research was completed prior to joining AMS, its conclusions are consistent with the work that AMS has been doing for nearly two decades. Hospitals can improve their HCAHPS scores and become more cost efficient when physicians and hospitals are aligned. Quality and cost efficiency are highly related, and hospitals can become more efficient. Gainsharing is a powerful tool for hospital teams to engage physicians and align incentives as they both work together in this value creation path.
