title: Cost-effectiveness of hospital pay-for-performance incentives.
abstract: One increasingly popular mechanism for stimulating quality improvements is pay-for-performance, or incentive, programs. This article examines the cost-effectiveness of a hospital incentive system for heart-related care, using a principal-agent model, where the insurer is the principal and hospitals are the agents. Four-year incentive system costsfor the payer were dollar 22,059,383, composed primarily of payments to the participating hospitals, with approximately 5 percent in administrative costs. Effectiveness is measured in stages, beginning with improvements in the processes of heart care. Care process improvements are converted into quality-adjusted life years (QALYs) gained, with reference to literatures on clinical effectiveness and survival. An estimated 24,418 patients received improved care, resulting in a range of QALYs from 733 to 1,701, depending on assumptions about clinical effectiveness. Cost per QALY was found to be between dollar 12,967 and dollar 30,081, a level well under consensus measures of the value of a QALY.
authors: University of Michigan, USA.
authors: Tammie A
authors: TA
authors: Nahra
authors: Kristin L
authors: KL
authors: Reiter
authors: Richard A
authors: RA
authors: Hirth
authors: Janet E
authors: JE
authors: Shermer
authors: John R C
authors: JR
authors: Wheeler