The Down Side Of Pay-For-Performance

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(Ninja M./flickr)
(Ninja M./flickr)

But in reality, there's a dark side, according to a new editorial published in the British medical journal BMJ. The authors write that "a growing body of evidence from behavioral economics and social psychology indicates that rewards can undermine motivation and worsen performance on complex cognitive tasks, especially when motivation is high to begin with."

A related article, also in the BMJ, proposes a checklist to try to guard against such distorted behavior.

In a joint news release, the authors say that while pay-for-performance is becoming widely adopted — in the federal Affordable Care Act, under Medicare and part of the new Massachusetts cost-cutting law — there's little evidence that the practice is effective and it may in fact "do harm."

Here's the release, emailed to media by the single-payer advocacy group, Physicians For a National Health Program (which was co-founded by two of the editorial authors, Dr. David Himmelstein and Dr. Steffie Woolhandler, visiting professors at Harvard Medical School. They write that PNHP played no role in supporting their research):

The editorial, echoing a theme of the accompanying article, says there’s very little evidence that P4P has improved patient survival or any other measure of public health.

“Despite a dearth of robust evidence that P4P is clinically effective in health care, payers charge ahead with implementing everywhere an intervention that has proven to work nowhere,” the authors write.

Worse still, there is mounting evidence – reinforced by the latest findings in behavioral economics – that such schemes may actually do harm, the authors say.

For example, doctors and nurses may perceive detailed, overly prescriptive financial P4P contracts as “controlling,” which can cause them to dissociate from their work, lose their intrinsic motivation to do their very best for the patient, and engage in gaming – the medical equivalent of “teaching to the test.”

According to the authors, such gaming – e.g. “upcoding” a diagnosis to another condition that yields a higher payment – is already rife. For instance, labeling a pneumonia patient’s condition as “complex” rather than “simple” can increase the hospital’s payment by 42 percent.

“Pay for performance inverts medical priorities, making care an instrument for generating money, rather than vice versa,” said Dr. David Himmelstein, professor at the City University of New York’s School of Public Health and senior author of the editorial. “It can mutate honesty and altruism into accounting and legal trickery.”

Dan Ariely, James B. Duke Professor of Psychology and Behavioral Economics at Duke University, co-author of the editorial and the author of numerous research studies and three bestselling books on behavioral economics, including “The (Honest) Truth about Dishonesty,” said: “Several studies show that while performance-based rewards can increase output for straightforward manual tasks, they can undermine motivation and actually worsen performance on complex cognitive tasks, such as those required in medicine. The unintended consequence is likely a worsening of care, not its improvement.”

Lead author Dr. Steffie Woolhandler, also a professor at CUNY’s School of Public Health, noted another hazard: Some physicians in safety-net hospitals may score poorly because of circumstances beyond their control, such as their institution’s financial distress. “In such situations, penalizing low-scorers can make matters worse, effectively punishing patients who have nowhere else to go,” she said.

Himmelstein and Woolhandler are also visiting professors of medicine at Harvard Medical School and the co-founders of Physicians for a National Health Program, an organization of 18,000 doctors who advocate for a single-payer health care system. PNHP played no role in supporting their research.

The editorial concludes, “We worry that P4P may simply not work because it changes the mindset for good doctoring. However, if P4P schemes must be envisaged then rigorous consideration of their likely benefit prior to their implementation seems essential,” referring to an exacting P4P checklist developed by the authors of the related article.

This program aired on August 14, 2012. The audio for this program is not available.

Rachel Zimmerman Twitter Health Reporter
Rachel Zimmerman previously reported on health and the intersection of health and business for Bostonomix.