Skip Navigation Archive: U.S. Department of Health and Human Services www.hhs.gov
Archive: Agency for Healthcare Research Quality www.ahrq.gov
Archive print banner

This information is for reference purposes only. It was current when produced and may now be outdated. Archive material is no longer maintained, and some links may not work. Persons with disabilities having difficulty accessing this information should contact us at: https://info.ahrq.gov. Let us know the nature of the problem, the Web address of what you want, and your contact information.

Please go to www.ahrq.gov for current information.

Buy-Right for Health Care Quality: Evidence and Indicators: Paying for Performance

Slide Presentation by R. Adams Dudley, M.D., M.B.A.


On October 21, 2004, Dr. Dudley made a presentation in a Web conference entitled Buy-Right for Health Care Quality: Evidence and Indicators: Paying for Performance.

This is the text version of Dr. Dudley's slide presentation. Select to access the PowerPoint® Slides (100 KB).


Using Incentives to Improve Quality in Health Care: Key Concepts and Review of the Literature

R. Adams Dudley, M.D., M.B.A., Jason Talavera, Harold S. Luft, Ph.D.
University of California, San Francisco
Anne Frolich, M.D.
Bispebjerg Hospital, University of Copenhagen
Peter Broadhead
Australian Dept of Health and Ageing
Support: Agency for Healthcare Research and Quality, Commonwealth Fund

Slide 1

Conceptual Considerations: Characteristics of the Incentive

  • Magnitude of a financial incentive.
  • Reputational effects from public reporting.
  • Costs of complying.

Slide 2

Conceptual Considerations: Factors External to the Incentive

  • Business environment (e.g., FFS vs. capitation, alternative incentive programs).
  • Specific characteristics of the provider (e.g., years since training, work load before the incentive).
  • Organizational characteristics of the provider's group (e.g., information technology available).
  • Patient factors (e.g., education level, willingness to take on self-care).

Slide 3

Model of An Individual Provider's Response to Incentives

This slide contains a model of an Individual Provider's Response to incentives. The model demonstrates the influential forces between the Intervention Component, Recipient of Incentive, and Predisposing Factors.

There are three columns across the slide.

The column on the left is labeled "intervention component" and contains a box listing:

  • Revenue Potential.
  • Direct and Opportunity Costs of Complying.
  • Non-financial characteristics.

The middle column is labeled "Recipient of Incentive," and contains a vertical series of boxes. The top box is labeled "Provider Group (if applicable)." From this box an arrow points down to a box labeled "Provider's 'need' to respond to incentives." An arrow points to a box below, labeled "Provider response: change in care structure or process." From this box an arrow points down to a box labeled "Provider response: change in care structure or process." From this box an arrow points down to a box labeled "Outcomes-change in" listing:

  • Clinical performance measures.
  • Non-financial outcomes for the provider (e.g. provider satisfaction).
  • Financial results for the provider.

The column on the right is labeled "Predisposing Factors and Enabling Factors" and contains a vertical series of boxes, the first is labeled "General Financial Environment; other incentives", the second is labeled "Provider Characteristics," and the third is labeled "Market Characteristics." Labeled the middle of the column is "Enabling Factors," There are 2 boxes under this label: "Organization's capabilities and goals" and "Patient Factors."

Slide 4

The Literature On Value-Based Purchasing (VBP): What is Known?

  • Only 9 randomized trials of incentives to improve quality.
  • Two general findings:
    • Providers respond appropriately to financial incentives.
    • Providers respond appropriately to public release of performance data.

Slide 5

The Literature On VBP: Incentives Can Work

  • In some circumstances, providers respond to financial incentives:
    • Paid residents their salary plus $2/visit scheduled vs. $20/month for attending clinic.
    • FFS-incentivized residents did better complying with well-child care recommendations and continuity...for $2!

Reference: Hickson, et al. Pediatrics 1987;80(3):344

Slide 6

Public Reporting of Quality Measurements: Impact on hospitals with poor scores*

This slide contains a bar graph labeled, "Percentage of hospitals with quality improvement activities in reducing hemorrhage." On the vertical axis are percentages from 0-100% and on the horizontal axis are three vertical bars. On the far left, "Public-Reporting (88%)," in the middle, "Private-Reporting (27%)," and on the right, "No-Report (9%)." There is a note and a reference at the bottom of the slide: "(p < .001, N=34)

Reference: Hibbard, et al. Health Affairs 2003;22(4):84"

Slide 7

The Literature on VBP: Results by Topic

  • Uncertainty about the chance of success may matter.
    • FFS: 4 positive studies, one negative.
    • Bonus for hitting a compliance rate target:
      • Two positive, three negative.
      • Two negative were for a ~10-20% chance of getting a bonus if performance better than other groups.

Slide 8

The Literature On VBP: What is still unknown?

  • How big do incentives need to be?
  • Does it matter if you're adding incentives to a fee-for-service or a capitated system?
  • Should they focus on individual providers or groups?
  • Should there be incentives to adopt enabling technologies (e.g., information systems)?
  • Does using incentives save purchasers money?

Current as of March 2005


Internet Citation:

Using Incentives to Improve Quality in Health Care: Key Concepts and Review of the Literature. Text version of a slide presentation at a Web conference. Agency for Healthcare Research and Quality, Rockville, MD. http://www.ahrq.gov/news/ulp/buyright/dudleytxt.htm


Return to Web Conference

The information on this page is archived and provided for reference purposes only.

AHRQ Advancing Excellence in Health Care