Pay-for-Performance in the Healthcare System


Medical care expenses continue to increase in nations all over the world. It follows the development of sophisticated therapies and clinical procedures which improve the outcome of clinical care and the life expectancy of patients with critical health conditions. In the United States, the implementation of advanced healthcare protocols demands a substantial sum of money (Roberts et al., 2018). As a result, the federal government has put in policies towards achieving good clinical care, even for poor people. The initiatives are based on pay-for-performance criteria in which incentives are given to healthcare practitioners based on the quality of treatment outcomes given to patients (Kyeremanteng et al., 2019). This paper explores the practicality of implementing pay-for-performance in our healthcare organization. The content discussed includes the metrics for determining the effectiveness of the pay-for-performance plan, its advantages and disadvantages to the employer and employees, and recommendations for appropriate actions.

The measure of Pay-for-Performance Effectiveness

Increased survival rates in critical cases are one of the determinants of pay-for-performance policy. The Centers for Medicare and Medicaid Services in the United States are in charge of assessing the performance of hospitals and practitioners in meeting societal healthcare needs. One of the programs they have put in place to tighten practitioners’ commitment to quality service delivery is the Merit-based Incentive Payment System (Markovitz & Ryan, 2017). The payment plan for doctors, clinicians, and nurses holds them accountable for the wellness of patients by adhering to treatment procedures. The physician being incentivized will be determined to ensure that patients under their care undergo treatments that would fasten their healing. Moreover, the probability of health service providers avoiding cases with special attention is diminished since their salaries are given on account of patients’ recovery (Roberts et al., 2018). Thus, evidence-based practice by medical practitioners is a measure of pay-for-performance policy.

Hospital re-admission is an indicator that treatments given to patients and clinical services provided to them are not effective enough to help their needs. The Centers for Medical Care and Medicaid services in the United States evaluate the performance of hospitals and physicians based on the re-admission of patients for the same illness. Consequently, the health facility gets graded on an index of performance which also reflects the competency of practitioners serving sick people (Roberts et al., 2018). When there are low cases of re-admission for sicknesses, the pay for competency-based practice increases, and employees in the same health facility get compensated according to how they attend to patients’ needs (Martin et al., 2020). Dedication of time and skills by practitioners for quality output towards patients’ care is an indication that a pay-for-performance policy is a successful program for the organization.

Practitioners’ readiness to engage in an incentive payment system is a measure of its effectiveness for human benefit. The pay-for-performance allows patients or people responsible for channeling the cost of treatment through a monitored system, not under the control of medical care providers (Kyeremanteng et al., 2019). As a result, the process of engaging with patients and administering treatments to them is based on the willingness of practitioners. Moreover, it puts healthcare workers at the same level of payment, making them not withdraw from a given case of illness while looking for better ways of earning. The policy compels healthcare providers to be responsible and commit to the duties they often neglect while looking for better payment without taking advantage of payment variations in hospitals (Roberts et al., 2018). The readiness of healthcare providers to dedicate themselves to serving patients through pay-for-performance indicates its effectiveness in achieving quality in the system.

Advantages of Pay-for-Performance Plan

The pay-for-performance plan align with the intrinsic motivation of healthcare professionals. The inspiration to make great achievements in life and attributes found not only in medical doctors but nurses and clinicians also possess the same trait. It is to the advantage of healthcare workers to engage in incentive-based payment as its main goal is to ensure a high level of performance while serving patients (Kyeremanteng et al., 2019). Physicians exhibit an intrinsic sense of self-mastery and autonomous decision-making for a purposeful life. As good quality healthcare forms the foundation of a pay-for-performance plan, young practitioners in organizations are inclined to satisfy patients’ needs to generate more income. Moreover, it is always the motivation of healthcare providers to take care of patients, thus, the incentives are avenues of making their gain serving patients legitimate (Markovitz & Ryan, 2017). Therefore, payment of services given to patients based on the quality of work done is to the satisfaction of healthcare professionals’ interests.

Emphasis on the quality of healthcare service provision enhances the professionalism of practitioners. The value of patients’ health through pay-for-performance focuses on the capabilities of healthcare providers. The payment plan sets a standard for every physician to fulfill in the path of duty (Martin et al., 2020). Quality sensitization in administering treatments to patients focuses on specific clinical procedures and activities, which draws the attention of health workers to become experts in their areas of specialization. Clinicians in the United States believe that measures for quality assurance in healthcare provision are significant in improving their work output with a positive outcome in the long run. Furthermore, the feedback system from clients and other targets essentially demonstrates how proficient doctors are in their areas of specialization (Mendelson et al., 2017). Thus, the pay-for-performance plan is a strategic mechanism through which healthcare professionals prosper in meeting their life goals.

The pay-for-performance plan confers diverse benefits to healthcare organizations depending on the situation on the ground. Retention of talent is one advantage that healthcare facilities obtain through giving incentives to employees. Following competition in the economic world, top-performing professionals are always poached by high-paying organizations leaving developing health facilities in a struggle to meet patients’ needs (Martin et al., 2020). However, substantial compensation given through incentives facilitates the retention of practitioners in their facilities of employment. Withdrawing from technical situations in finding advantageous grounds by healthcare providers is reduced to a greater extent (Markovitz & Ryan, 2017). Thus, pay-for-performance helps organizations in reducing the chances of losing top-skilled professionals.

A pay-for-performance plan promotes the value of an organization by focusing employees’ attention on a high level of output. Every company is working towards being a leader in the line of business. Achieving such a reputation, however, necessitates ensuring excellence in every activity or procedure done within the premises of the organization. Through quality control and assurance measures in the pay-for-performance policy, employees are tasked both directly and indirectly with fulfilling organizational goals (Kyeremanteng et al., 2019). Therefore, the incentive plan of payment is essential in accomplishing the mission of the healthcare industry on both a short- and long-term basis.

Disadvantages of Pay-for-Performance Plan

Despite being an effective plan for ensuring quality in the healthcare system, pay-for-performance is exploitative to some patients. At times, a patient may not be in a situation demanding special attention or service from physicians, but he or she is obliged to fulfilling high financial demands for incentives. On some occasions, patients are put in the intensive care unit (ICU) even in a situation not demanding such critical care (Mendelson et al., 2017). The evaluation is done as an assurance that the ill person is well recovering enough to fulfill the stipulated financial obligations in the pay-for-performance policies. Moreover, the demand for evidence-based practice through a pay-for-performance plan holds practitioners accountable for every unfulfilled medical procedure, irrespective of whether patients are in need or not (Kyeremanteng et al., 2019). The implication is that pay for performance exploits patients seeking healthcare services financially.

Incentivizing practitioners for the services is based on the quality of treatment outcome. However, controversy arises when evaluating the quality of administering treatments from the perspective of patients’ view what is being measured might not represent the actual requirement as understood by physicians. As a result, the healthcare organization easily gets into a problem with the Centers for Medical Care and Medicaid Services, and getting a bad reputation is not deserved (Markovitz & Ryan, 2017). Moreover, some healthcare services are incentivized more than others in the pay-for-performance program. Eventually, the organization employing practitioners get into a misunderstanding with the employees following inequality in rewarding peoples’ hard work. The healthcare providers get demoralized following the demanding output against favoritism in certain cases (Mendelson et al., 2017). Thus, pay-for-performance deprives healthcare organizations of achieving a peaceful working environment.


A pay-for-performance plan is essential for ensuring quality in healthcare provision. The financial incentives given to practitioners and conditions attached to them, however, require situational analysis following the positive and negative impacts that the policy carries with it. The positive implications of pay-for-performance indicate that holistic health status can be achieved through hospital systems based on the emphasis on the quality of treatments given (Mendelson et al., 2017). Considering that healthcare practice has one major goal, which is saving lives from diseases to improve lifespan, pay-for-performance is an initiative that would function effectively in solving the hard situation in the health care system.

The evidence that pay-for-performance is functional in all circumstances is inconclusive, however much it presents as a potential avenue for saving lives in critical situations. It is appropriate to consider the clinical conditions and distinguish how effective it would be for patients to account for incentives to practitioners while paying for the services administered to them. Moreover, implementing pay-for-performance in every situation would easily exclude poor individuals from the financial plan and access to healthcare services (Kaufman et al., 2019). Therefore, the aspect of patient exploitation as a strategy for ensuring excellence in healthcare service provision is a matter for further consideration while implementing the pay-for-performance policy.


In a nutshell, healthcare services provision demands quality in practicing medical procedures. Physicians, clinicians, and nurses are accountable for every action they take toward saving lives. Motivating them to engage fully in the duty, which calls for much of their attention, is essential to maintain their integrity while on duty as well as a commitment to the organization. Pay-for-performance is a reliable avenue through which practitioners’ zeal would be augmented for their service to achieve holistic human health in society. It is, therefore, a recommendable strategy for our healthcare organization to succeed.


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Kyeremanteng, K., Robidoux, R., D’Egidio, G., Fernando, S. M., & Neilipovitz, D. (2019). An analysis of pay-for-performance schemes and their potential impacts on health systems and outcomes for patients. Critical Care Research and Practice, 2019, 1-7. Web.

Markovitz, A. A., & Ryan, A. M. (2017). Pay-for-performance: Disappointing results or masked heterogeneity?. Medical Care Research and Review, 74(1), 3-78. Web.

Martin, B., Jones, J., Miller, M., & Johnson-Koenke, R. (2020). Health care professionals’ perceptions of pay-for-performance in practice: A qualitative metasynthesis. INQUIRY: The Journal of Health Care Organization, Provision, and Financing, 57, 1-17. Web.

Mendelson, A., Kondo, K., Damberg, C., Low, A., Motúapuaka, M., Freeman, M., O’neil, M., Relevo, R., & Kansagara, D. (2017). The effects of pay-for-performance programs on health, health care use, and processes of care: A systematic review. Annals of Internal Medicine, 166(5), 341-353. Web.

Roberts, E. T., Zaslavsky, A. M., Barnett, M. L., Landon, B. E., Ding, L., & McWilliams, J. M. (2018). Assessment of the effect of adjustment for patient characteristics on hospital readmission rates: Implications for pay for performance. JAMA Internal Medicine, 178(11), 1498-1507. Web.

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