The cost-effectiveness of using financial incentives to improve provider quality: a framework and application.
Despite growing adoption of pay-for-performance (P4P) programmes in health care, there is remarkably little evidence on the cost-effectiveness of such schemes. We review the limited number of previous studies and critique the frameworks adopted and the narrow range of costs and outcomes considered, before proposing a new more comprehensive framework, which we apply to the first P4P scheme introduced for hospitals in England. We emphasise that evaluations of cost-effectiveness need to consider who the residual claimant is on any cost savings, the possibility of positive and negative spillovers, and whether performance improvement is a transitory or investment activity. Our application to the Advancing Quality initiative demonstrates that the incentive payments represented less than half of the £ 13 m total programme costs. By generating approximately 5200 quality-adjusted life years and £ 4.4 m of savings in reduced length of stay, we find that the programme was a cost-effective use of resources in its first 18 months.
Manchester Centre for Health Economics, Institute of Population Health, The University of Manchester, UK.
Rachel
R
Meacock
Søren Rud
SR
Kristensen
Matt
M
Sutton
D003362:Cost-Benefit Analysis; D004739:England; D006333:Heart Failure / Q000191:economics / Q000401:mortality; D017052:Hospital Mortality / Q000639:trends*; D006801:Humans; D007902:Length of Stay / Q000191:economics* / Q000639:trends; D009042:Motivation; D009203:Myocardial Infarction / Q000191:economics / Q000401:mortality; D011014:Pneumonia / Q000191:economics / Q000401:mortality; D019984:Quality Indicators, Health Care; D019057:Quality-Adjusted Life Years; D012052:Reimbursement, Incentive / Q000191:economics*
Cost-effectiveness; Pay-for-performance