Will financial incentives and penalties improve hospital care?

Alignment in the Hospital-Physician Relationship: A Qualitative Multiple Case Study of Medical Specialist Enterprises in the Netherlands

BACKGROUND

Policy-makers and hospital boards throughout the world have implemented different measures to create and sustain effective hospital-physician relationships. The 'integrated funding' policy reform in the Netherlands was aimed at increasing hospital-physician alignment and led to the unforeseen formation of medical specialist enterprises (MSEs): a fiscal entity representing all self-employed physicians in a hospital. It is unknown how hospitals and MSEs perceive their alignment and how they govern the relationship. This study explores the hospital-MSE relationship, and how governance styles influence perceived alignment in this relationship.

METHODS

A multiple case study of five non-academic hospitals in the Netherlands was performed. Data was derived from two sources: (1) analysis of hospital-MSE contracts and (2) semi-structured interviews with hospital and MSE board members. Contracts were analysed using a predefined contract analysis template. Interview recordings were transcribed and subsequently coded using the sensitizing concepts approach.

RESULTS

Contracts, relational characteristics, governance styles and perceived alignment differed substantially between cases. Two out of five contracts were prevention contracts, one was a mixed type, and two were promotion contracts. However, in all cases the contract played no role in the relationship. The use of incentives varied widely between the hospitals; most incentives were financial penalties. The governance style varied between contractual for two hospitals, mixed for one hospital and predominantly relational for two hospitals. Development of a shared business strategy was identified as an important driver of relational governance, which was perceived to boost alignment.

CONCLUSION

Large variation was observed regarding relational characteristics, governance and perceived alignment. MSE formation was perceived to have contributed to hospital-physician alignment by uniting physicians, boosting physicians' managerial responsibilities, increasing financial alignment and developing shared business strategies. Relational governance was found to promote intensive collaboration between hospital and MSE, and thus may improve alignment in the hospital-physician relationship.

Economic Analysis of the European Healthcare Burden of Sternal-Wound Infections Following Coronary Artery Bypass Graft

Background: Sternal wound infections (SWIs) can be some of the most complex surgical-site infections (SSIs) and pose a considerable risk following coronary artery bypass graft surgery (CABG). Objective: To capture the cost burden of SWIs following CABG across European countries. Methods: We modeled a standardized care pathway for CABG, starting at the point of surgery and extending to 1-year post surgery. The Markov model captures the incidence and cost of an SWI (deep or superficial SWIs). The cost burden is calculated from a hospital perspective such that the main inputs relating to costs were intensive-care-unit (ICU) and general-ward (GW) days. Outpatient care, not in the hospital setting, has no cost in this analysis. Model input parameters were taken from Eurostat and a review of published, peer-reviewed literature. European countries were included in this analysis when values for 50% of the required input parameters per country were identified. Missing data points were interpolated from available data. The robustness of results was assessed via probabilistic sensitivity analysis. Results: Full required input data were available for 8 European countries; a further 18 countries had sufficient data for analysis. The median (interquartile range) for SWI incidence across the 26 countries was 3.9% (2.9-5.6%). The total burden for all 26 countries of SWIs after CABG was €170.8 million. These costs were made up of 25,751 additional ICU days, 137,588 additional GW days, and 7,704 readmissions. The mean cost of an SWI ranged from €8,924 in Poland to €21,321 in Denmark. Relative to the costs of post-CABG care without an SWI complication, the incremental cost of an SWI was highest in Greece (24.9% increase) and lowest in the UK (3.8% increase) with a median (interquartile range) of 12% (10-16%) across all 26 countries. Conclusions: SWIs following CABG present a considerable burden to healthcare budgets.

Using hospital network-based surveillance for antimicrobial resistance as a more robust alternative to self-reporting

Hospital performance is often measured using self-reported statistics, such as the incidence of hospital-transmitted micro-organisms or those exhibiting antimicrobial resistance (AMR), encouraging hospitals with high levels to improve their performance. However, hospitals that increase screening efforts will appear to have a higher incidence and perform poorly, undermining comparison between hospitals and disincentivising testing, thus hampering infection control. We propose a surveillance system in which hospitals test patients previously discharged from other hospitals and report observed cases. Using English National Health Service (NHS) Hospital Episode Statistics data, we analysed patient movements across England and assessed the number of hospitals required to participate in such a reporting scheme to deliver robust estimates of incidence. With over 1.2 million admissions to English hospitals previously discharged from other hospitals annually, even when only a fraction of hospitals (41/155) participate (each screening at least 1000 of these admissions), the proposed surveillance system can estimate incidence across all hospitals. By reporting on other hospitals, the reporting of incidence is separated from the task of improving own performance. Therefore the incentives for increasing performance can be aligned to increase (rather than decrease) screening efforts, thus delivering both more comparable figures on the AMR problems across hospitals and improving infection control efforts.

Effectiveness of UK provider financial incentives on quality of care: a systematic review

BACKGROUND

Provider financial incentives are being increasingly adopted to help improve standards of care while promoting efficiency.

AIM

To review the UK evidence on whether provider financial incentives are an effective way of improving the quality of health care.

DESIGN AND SETTING

Systematic review of UK evidence, undertaken in accordance with Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA) recommendations.

METHOD

MEDLINE and Embase databases were searched in August 2016. Original articles that assessed the relationship between UK provider financial incentives and a quantitative measure of quality of health care were included. Studies showing improvement for all measures of quality of care were defined as 'positive', those that were 'intermediate' showed improvement in some measures, and those classified as 'negative' showed a worsening of measures. Studies showing no effect were documented as such. Quality was assessed using the Downs and Black quality checklist.

RESULTS

Of the 232 published articles identified by the systematic search, 28 were included. Of these, nine reported positive effects of incentives on quality of care, 16 reported intermediate effects, two reported no effect, and one reported a negative effect. Quality assessment scores for included articles ranged from 15 to 19, out of a maximum of 22 points.

CONCLUSION

The effects of UK provider financial incentives on healthcare quality are unclear. Owing to this uncertainty and their significant costs, use of them may be counterproductive to their goal of improving healthcare quality and efficiency. UK policymakers should be cautious when implementing these incentives - if used, they should be subject to careful long-term monitoring and evaluation. Further research is needed to assess whether provider financial incentives represent a cost-effective intervention to improve the quality of care delivered in the UK.

Pharmaceutical policies: effects of financial incentives for prescribers

BACKGROUND

The proportion of total healthcare expenditures spent on drugs has continued to grow in countries of all income categories. Policy-makers are under pressure to control pharmaceutical expenditures without adversely affecting quality of care. Financial incentives seeking to influence prescribers' behaviour include budgetary arrangements at primary care and hospital settings (pharmaceutical budget caps or targets), financial rewards for target behaviours or outcomes (pay for performance interventions) and reduced benefit margin for prescribers based on medicine sales and prescriptions (pharmaceutical reimbursement rate reduction policies). This is the first update of the original version of this review.

OBJECTIVES

To determine the effects of pharmaceutical policies using financial incentives to influence prescribers' practices on drug use, healthcare utilisation, health outcomes and costs (expenditures).

SEARCH METHODS

We searched the Cochrane Central Register of Controlled Trials (CENTRAL) (searched 29/01/2015); MEDLINE, Ovid SP (searched 29/01/2015); EMBASE, Ovid SP (searched 29/01/2015); International Network for Rational Use of Drugs (INRUD) Bibliography (searched 29/01/2015); National Health Service (NHS) Economic Evaluation Database (searched 29/01/2015); EconLit - ProQuest (searched 02/02/2015); and Science Citation Index and Social Sciences Citation Index, Institute for Scientific Information (ISI) Web of Knowledge (citation search for included studies searched 10/02/2015). We screened the reference lists of relevant reports and contacted study authors and organisations to identify additional studies.

SELECTION CRITERIA

We included policies that intend to affect prescribing by means of financial incentives for prescribers. Included in this category are pharmaceutical budget caps or targets, pay for performance and drug reimbursement rate reductions and other financial policies, if they were specifically targeted at prescribing or drug utilisation. Policies in this review were defined as laws, rules, regulations and financial and administrative orders made or implemented by payers such as national or local governments, non-government organisations, private or social insurers and insurance-like organisations. One of the following outcomes had to be reported: drug use, healthcare utilisation, health outcomes or costs. The study had to be a randomised or non-randomised trial, an interrupted time series (ITS) analysis, a repeated measures study or a controlled before-after (CBA) study.

DATA COLLECTION AND ANALYSIS

At least two review authors independently assessed eligibility for inclusion of studies and risks of bias using Cochrane Effective Practice and Organisation of Care (EPOC) criteria and extracted data from the included studies. For CBA studies, we reported relative effects (e.g. adjusted relative change). The review team re-analysed all ITS results. When possible, the review team also re-analysed CBA data as ITS data.

MAIN RESULTS

Eighteen evaluations (six new studies) of pharmaceutical policies from six high-income countries met our inclusion criteria. Fourteen studies evaluated pharmaceutical budget policies in the UK (nine studies), two in Germany and Ireland and one each in Sweden and Taiwan. Three studies assessed pay for performance policies in the UK (two) and the Netherlands (one). One study from Taiwan assessed a reimbursement rate reduction policy. ITS analyses had some limitations. All CBA studies had serious limitations. No study from low-income or middle-income countries met the inclusion criteria.Pharmaceutical budgets may lead to a modest reduction in drug use (median relative change -2.8%; low-certainty evidence). We are uncertain of the effects of the policy on drug costs or healthcare utilisation, as the certainty of such evidence has been assessed as very low. Effects of this policy on health outcomes were not reported. Effects of pay for performance policies on drug use and health outcomes are uncertain, as the certainty of such evidence has been assessed as very low. Effects of this policy on drug costs and healthcare utilisation have not been measured. Effects of the reimbursement rate reduction policy on drug use and drug costs are uncertain, as the certainty of such evidence has been assessed as very low. No included study assessed the effects of this policy on healthcare utilisation or health outcomes. Administration costs of the policies were not reported in any of the included studies.

AUTHORS' CONCLUSIONS

Although financial incentives are considered an important element in strategies to change prescribing patterns, limited evidence of their effects can be found. Effects of policies, including pay for performance policies, in improving quality of care and health outcomes remain uncertain. Because pharmaceutical policies have uncertain effects, and because they might cause harm as well as benefit, proper evaluation of these policies is needed. Future studies should consider the impact of these policies on health outcomes, drug use and overall healthcare expenditures, as well as on drug expenditures.

Incentivising improvements in health care delivery

This Special Section of Health Economics, Policy and Law begins with an article on the different ways in which one might incentivise improved performance among health care providers. I asked five experts on performance management, Gwyn Bevan, Tim Doran, Peter Smith, Sandra Tanenbaum and Karsten Vrangbaek, to write brief reactions to the article and to the notion of performance management in health care in general. The commentators were given an open remit to be as critical as they wished to be, and their reactions can be found in the pages that follow. I would like to thank Albert Weale for reviewing all of the articles, and Katie Brennan for serving as the catalyst for this collection.

Improving the productivity of elective surgery through a new 'package of care'

In response to a need to improve the productivity and throughput of elective surgical services, one district health board (DHB) in New Zealand has introduced a 'package of care' (POC) in which incentive-based, risk-sharing contracts were developed collaboratively between DHB managers, surgeons and anaesthetists. The POC includes throughput targets and facilitates consistent surgical teams and the cohorting of patients. Whilst many staff are very supportive of the POC, some are of the view that it conflicts with the ideals and principles of working in a public health system, and creates inequities amongst the hospital staff. Analysis indicates that, after controlling for age, casemix and complexity the POC has resulted in shorter theatre times, shorter lengths of stay and lower average inpatient event costs compared with standard care at the public hospital. An unintended consequence could be that the POC may encourage throughput of less complex cases at the expense of more complex cases. The average complexity and range of cases performed publicly should be carefully monitored to ensure this does not occur.

Effectiveness of provider incentives for anaemia reduction in rural China: a cluster randomised trial

OBJECTIVES

To test the impact of provider performance pay for anaemia reduction in rural China.

DESIGN

A cluster randomised trial of information, subsidies, and incentives for school principals to reduce anaemia among their students. Enumerators and study participants were not informed of study arm assignment.

SETTING

72 randomly selected rural primary schools across northwest China.

PARTICIPANTS

3553 fourth and fifth grade students aged 9-11 years. All fourth and fifth grade students in sample schools participated in the study.

INTERVENTIONS

Sample schools were randomly assigned to a control group, with no intervention, or one of three treatment arms: (a) an information arm, in which principals received information about anaemia; (b) a subsidy arm, in which principals received information and unconditional subsidies; and (c) an incentive arm, in which principals received information, subsidies, and financial incentives for reducing anaemia among students. Twenty seven schools were assigned to the control arm (1816 students at baseline, 1623 at end point), 15 were assigned to the information arm (659 students at baseline, 596 at end point), 15 to the subsidy arm (726 students at baseline, 667 at end point), and 15 to the incentive arm (743 students at baseline, 667 at end point).

MAIN OUTCOME MEASURES

Student haemoglobin concentrations.

RESULTS

Mean student haemoglobin concentration rose by 1.5 g/L (95% CI -1.1 to 4.1) in information schools, 0.8 g/L (-1.8 to 3.3) in subsidy schools, and 2.4 g/L (0 to 4.9) in incentive schools compared with the control group. This increase in haemoglobin corresponded to a reduction in prevalence of anaemia (Hb <115 g/L) of 24% in incentive schools. Interactions with pre-existing incentives for principals to achieve good academic performance led to substantially larger gains in the information and incentive arms: when combined with incentives for good academic performance, associated effects on student haemoglobin concentration were 9.8 g/L (4.1 to 15.5) larger in information schools and 8.6 g/L (2.1 to 15.1) larger in incentive schools.

CONCLUSIONS

Financial incentives for health improvement were modestly effective. Understanding interactions with other motives and pre-existing incentives is critical.

TRIAL REGISTRATION NUMBER

ISRCTN76158086.

Heart failure services in the United Kingdom: rethinking the machine bureaucracy

Poor outcomes and poor uptake of evidence based therapies persist for patients with heart failure in the United Kingdom. We offer a strategic analysis of services, defining the context, organization and objectives of the service, before focusing on implementation and performance. Critical flaws in past service development and performance are apparent, a consequence of failed performance management, policy and political initiative. The barriers to change and potential solutions are common to many health care systems. Integration, information, financing, incentives, innovation and values: all must be challenged and improved if heart failure services are to succeed. Modern healthcare requires open adaptive systems, continually learning and improving. The system also needs controls. Performance indicators should be simple, clinically relevant, and outcome focused. Heart failure presents one of the greatest opportunities to improve symptoms and survival with existing technology. To do so, heart failure services require radical reorganization.

Pay-for-performance in disease management: a systematic review of the literature

BACKGROUND

Pay-for-performance (P4P) is increasingly implemented in the healthcare system to encourage improvements in healthcare quality. P4P is a payment model that rewards healthcare providers for meeting pre-established targets for delivery of healthcare services by financial incentives. Based on their performance, healthcare providers receive either additional or reduced payment. Currently, little is known about P4P schemes intending to improve delivery of chronic care through disease management. The objectives of this paper are therefore to provide an overview of P4P schemes used to stimulate delivery of chronic care through disease management and to provide insight into their effects on healthcare quality and costs.

METHODS

A systematic PubMed search was performed for English language papers published between 2000 and 2010 describing P4P schemes related to the implementation of disease management. Wagner's chronic care model was used to make disease management operational.

RESULTS

Eight P4P schemes were identified, introduced in the USA (n = 6), Germany (n = 1), and Australia (n = 1). Five P4P schemes were part of a larger scheme of interventions to improve quality of care, whereas three P4P schemes were solely implemented. Most financial incentives were rewards, selective, and granted on the basis of absolute performance. More variation was found in incented entities and the basis for providing incentives. Information about motivation, certainty, size, frequency, and duration of the financial incentives was generally limited. Five studies were identified that evaluated the effects of P4P on healthcare quality. Most studies showed positive effects of P4P on healthcare quality. No studies were found that evaluated the effects of P4P on healthcare costs.

CONCLUSION

The number of P4P schemes to encourage disease management is limited. Hardly any information is available about the effects of such schemes on healthcare quality and costs.

British Columbia hospitals: examination and assessment of payment reform (B-CHeaPR)

BACKGROUND

Accounting for 36% of public spending on health care in Canada, hospitals are a major target for cost reductions through various efficiency initiatives. Some provinces are considering payment reform as a vehicle to achieve this goal. With few exceptions, Canadian provinces have generally relied on global and line-item budgets to contain hospital costs. There is growing interest amongst policy-makers for using activity based funding (ABF) as means of creating financial incentives for hospitals to increase the 'volume' of care, reduce cost, discourage unnecessary activity, and encourage competition. British Columbia (B.C.) is the first province in Canada to implement ABF for partial reimbursement of acute hospitalization. To date, there have been no formal examinations of the effects of ABF policies in Canada. This study proposal addresses two research questions designed to determine whether ABF policies affect health system costs, access and hospital quality. The first question examines the impact of the hospital funding policy change on internal hospital activity based on expenditures and quality. The second question examines the impact of the change on non-hospital care, including readmission rates, amount of home care provided, and physician expenditures.

METHODS/DESIGN

A longitudinal study design will be used, incorporating comprehensive population-based datasets of all B.C. residents; hospital, continuing care and physician services datasets will also be used. Data will be linked across sources using anonymized linking variables. Analytic datasets will be created for the period between 2005/2006 and 2012/2013.

DISCUSSION

With Canadian hospitals unaccustomed to detailed scrutiny of what services are provided, to whom, and with what results, the move toward ABF is significant. This proposed study will provide evidence on the impacts of ABF, including changes in the type, volume, cost, and quality of services provided. Policy- and decision-makers in B.C. and elsewhere in Canada will be able to use this evidence as a basis for policy adaptations and modifications. The significance of this proposed study derives from the fact that the change in hospital funding policy has the potential to affect health system costs, residents' access to care and care quality.

The economic burden of Clostridium difficile

Although Clostridium difficile (C. difficile) is the leading cause of infectious diarrhoea in hospitalized patients, the economic burden of this major nosocomial pathogen for hospitals, third-party payers and society remains unclear. We developed an economic computer simulation model to determine the costs attributable to healthcare-acquired C. difficile infection (CDI) from the hospital, third-party payer and societal perspectives. Sensitivity analyses explored the effects of varying the cost of hospitalization, C. difficile-attributable length of stay, and the probability of initial and secondary recurrences. The median cost of a case ranged from $9179 to $11 456 from the hospital perspective, $8932 to $11 679 from the third-party payor perspective, and $13 310 to $16 464 from the societal perspective. Most of the costs incurred were accrued during a patient's primary CDI episode. Hospitals with an incidence of 4.1 CDI cases per 100 000 discharges would incur costs ≥$3.2 million (hospital perspective); an incidence of 10.5 would lead to costs ≥$30.6 million. Our model suggests that the annual US economic burden of CDI would be ≥$496 million (hospital perspective), ≥$547 million (third-party payer perspective) and ≥$796 million (societal perspective). Our results show that C. difficile infection is indeed costly, not only to third-party payers and the hospital, but to society as well. These results are consistent with current literature citing C. difficile as a costly disease.

Incentivizing professionals and patients: a consideration in the context of the United Kingdom and the United States

We are at the beginning of an era in which the pressure to secure the biggest possible "bang" for the health care "buck" is perhaps higher than it ever has been, on both sides of the Atlantic, and within the health policy discourse, incentives, for both professionals and patients, are occupying an increasingly prominent position. In this article, we consider issues related to motivating the professional and the patient to perform targeted actions, drawing on some of the evidence that has thus far been reported on experiences in the United Kingdom and the United States, and we present an admittedly somewhat speculative taxonomy of hypothesized effectiveness for some of the different methods by which each of these two broad types of incentives can be offered. We go on to summarize some of the problems of, and objections to, the use of incentives in health and health care, such as those relating to motivational crowding and gaming, but we conclude by positing that, following appropriate consideration, caution, and methodological and empirical investigation, health-related incentives, at least in some contexts, may contribute positively to the social good.

Effect of pay for performance on the management and outcomes of hypertension in the United Kingdom: interrupted time series study

OBJECTIVE

To assess the impact of a pay for performance incentive on quality of care and outcomes among UK patients with hypertension in primary care.

DESIGN

Interrupted time series.

SETTING

The Health Improvement Network (THIN) database, United Kingdom.

PARTICIPANTS

470 725 patients with hypertension diagnosed between January 2000 and August 2007.

INTERVENTION

The UK pay for performance incentive (the Quality and Outcomes Framework), which was implemented in April 2004 and included specific targets for general practitioners to show high quality care for patients with hypertension (and other diseases).

MAIN OUTCOME MEASURES

Centiles of systolic and diastolic blood pressures over time, rates of blood pressure monitoring, blood pressure control, and treatment intensity at monthly intervals for baseline (48 months) and 36 months after the implementation of pay for performance. Cumulative incidence of major hypertension related outcomes and all cause mortality for subgroups of newly treated (treatment started six months before pay for performance) and treatment experienced (started treatment in year before January 2001) patients to examine different stages of illness.

RESULTS

After accounting for secular trends, no changes in blood pressure monitoring (level change 0.85, 95% confidence interval -3.04 to 4.74, P=0.669 and trend change -0.01, -0.24 to 0.21, P=0.615), control (-1.19, -2.06 to 1.09, P=0.109 and -0.01, -0.06 to 0.03, P=0.569), or treatment intensity (0.67, -1.27 to 2.81, P=0.412 and 0.02, -0.23 to 0.19, P=0.706) were attributable to pay for performance. Pay for performance had no effect on the cumulative incidence of stroke, myocardial infarction, renal failure, heart failure, or all cause mortality in both treatment experienced and newly treated subgroups.

CONCLUSIONS

Good quality of care for hypertension was stable or improving before pay for performance was introduced. Pay for performance had no discernible effects on processes of care or on hypertension related clinical outcomes. Generous financial incentives, as designed in the UK pay for performance policy, may not be sufficient to improve quality of care and outcomes for hypertension and other common chronic conditions.

Realignment of incentives for health-care providers in China

Inappropriate incentives as part of China's fee-for-service payment system have resulted in rapid cost increase, inefficiencies, poor quality, unaffordable health care, and an erosion of medical ethics. To reverse these outcomes, a strategy of experimentation to realign incentives for providers with the social goals of improvement in quality and efficiency has been initiated in China. This Review shows how lessons that have been learned from international experiences have been improved further in China by realignment of the incentives for providers towards prevention and primary care, and incorporation of a treatment protocol for hospital services. Although many experiments are new, preliminary evidence suggests a potential to produce savings in costs. However, because these experiments have not been scientifically assessed in China, evidence of their effects on quality and health outcome is largely missing. Although a reform of the provider's payment can be an effective short-term strategy, professional ethics need to be re-established and incentives changed to alter the profit motives of Chinese hospitals and physicians alike. When hospitals are given incentives to achieve maximum profit, incentives for hospitals and physicians must be separated.