The cost of pay-for-performance in healthcare: an alternative view

Abstract

George Pink and his colleagues have provided healthcare policy makers with a thorough review of pay-for-performance systems in healthcare. In general, their review suggests that pay-for-performance systems have resulted in few positive, net outcomes for health systems. Among other things, they cite the perverse incentives often generated by these systems, as well as these systems' high design and administration costs. The following article, building on research in economics, sociology and social psychology, extends their discussion by suggesting why healthcare delivery may be a uniquely difficult sector in which to rely on pay-for-performance systems. This article does not intend to shut down discussion of pay-for-performance in healthcare, but instead suggests how we might usefully think about when pay-for-performance is more or less appropriate. This analysis reveals that the healthcare delivery sector has some unique advantages over other sectors and industries.