Pros And Cons Of Pay For Performance

Categories: HealthPerformance

Pay for performance are programs designed with an aim of improving the quality of health care and to control the increasingly high cost of health care services. However, these programs are characterized by many advantages as well as disadvantages. This paper seeks to identify the objectives of pay for performance policies. It gives a discussion of the effectiveness of pay for performance on improving quality as well as controlling the cost of health care services. It also focuses on the negative consequences of these programs and proposals for improving their effectiveness in meeting the intended goals.

Pay for performance programs are designed with an aim of attaining a number of objectives top on the list being to create strong financial incentives to health care specialists so that they can achieve a high quality work by increasing efficiency, productivity and compliance with clinical practices. This is achieved by establishing electronic data management system to increase the reliability of medical data, employing more nurses to increase efficiency in attending patients and development of clinical governance (Libby, Scanlon, & Nalli, 2007).

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Secondly, pay for performance programs are aimed at controlling excessive health care cost. Pay for performance has increased the health care professional commitment to their work in the light of earning more financial incentives. As a result, the high quality health care services will amount to healthier people and a decrease in the frequency of people seeking medical help as well as reducing the period of staying in the hospital (Libby, Scanlon, & Nalli, 2007).

As a consequence therefore, there will be reduction in health care expenses which will surpass the extra cost of additional employees and administrative cost with time. By funding health care organizations through the pay for performance programs, the government guarantees them higher profits which could have been reduced if the organizations had to cater for the extra expenses imposed by the process of improving quality (Young, & Conrad, 2007).

As a consequence therefore, the employees will ether earn less or the quality improvement programs will not be implemented and hence the associated benefits will not be realized. One of the positive impacts to the quality of health care organizations is that the electronic data recording system which was established through these programs had a 91% rating in terms of reliability in the United States.

This shows that the government was in a position to know the exact number of patients who are suffering from different types of chronicle diseases and hence it was put in a position to keep track on its programs to tackle those diseases. Increasing accuracy in the data management system also reduced the probability of health care specialist earning less than they deserve (Young, & Conrad, 2007). This is because, high number of unattended patients resulted to law financial incentives. Under this program, health care organizations could not report more patients than it could be clinically acceptable.

It is still worthy to note here that although increasing the number of nurses increases the size of the staff and hence more administrative cost, the waiting time of patients was reduced and attention to the patients was improved hence the overall efficiency in attending patients was increased (Young, & Conrad, 2007). Pay for performance is characterized by many disadvantages key of them being that it can lead to fragmentation of patients care. This is evidenced in cases where patients suffering from chronicle diseases such as diabetes are first attended by nurses who are overseen by physicians.

This puts the quality of the services in doubt. Still to be noted here is that pay for performance reduces complex task into a single and simple measurable performance method such as profit hence they fail to recognize the rest of the of the employees effort in solving the complexity of the condition (Galvin, 2006). As a result therefore, health care specialist tends to focus much on dealing with the disease which will earn them more incentives than the overall care of the patients as dictated by their codes of ethics.

Another disadvantage is that employees may be inclined to perform work in which is gauged in consistency with their performance appraisal leaving the less rewarded jobs conditions unattended yet they are all equality important for the well being of patients (Young, & Conrad, 2007). Some of the pay for performance programs does not meet the intended purpose because not all employees are motivated by financial incentives. Health care organizations and the government at large should therefore focus on other different ways of motivating employees such as good working environment and non-incentive recognition methods.


  1. Libby, D. , Scanlon, D. , & Nalli, G. (2007). Developing A Performance-Based Program For Hospitals: A Case Study From Maine. Health Affairs. 26, 3, 817.
  2. Galvin, R. (2006). Interview: Pay-For-Performance: Too Much of A Good Thing? A Conversation with Martin Roland. Health Affairs, 25, 412-419.
  3. Young, G. , & Conrad, D. (2007). Practical Issues inn the Design and Implementation of Pay-for-Quality Programs. Journal of Healthcare Management, 52, 1, 10-18.

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Pros And Cons Of Pay For Performance. (2016, Oct 27). Retrieved from

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