Lessons from Early Experience with Pay for Performance

Pay-for-performance schemes share the common approach of offering financial incentives to healthcare providers for achieving specified performance targets. Such schemes are becoming increasingly popular with healthcare policy makers and funders worldwide, despite a relative lack of evidence on their long-term effects. This article examines the emerging evidence and its likely consequences for the future development of pay for performance. Successful schemes are likely to be those that use evidence-based targets; focus on aspects of care for which there is a professional consensus on the need for improvement; incentivize practitioners across the range of performance; allow for professional judgment and discretion; offer adequate incentives; adjust for risks outside practitioners' control; involve patients in the design and implementation stages; make performance data publicly available; have a proper infrastructure in terms of adequate information technology systems and a receptive group of professionals; and are supported by other effective quality improvement initiatives. However, even the most successful schemes carry the risk of unintended effects, such as loss of professionalism, neglect of unincentivized activities, and fraudulent behavior. These risks need to be weighed against the potential benefits of financial incentives, and, in any future pay-for-performance schemes, should be mitigated during development and carefully monitored during implementation.