Pay for Performance – A Questionable Quality Improvement Strategy

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Pay for Performance –

A Questionable Quality Improvement Strategy

In the drive to improve quality in nursing homes, the increasing focus on pay-for-performance initiatives is fraught with pitfalls and may well lead providers on a path designed to “win” new resources instead of achieving actual quality improvements.

That’s the opinion of the authors of a new policy paper that examines the potential impact of pay-for-performance in long-term care.

The paper – Pay for Performance, or Value-Based Purchasing. Is it Likely to Help Improve Quality Long-Term Care? – was prepared by Village Care of New York.

Pay-for-performance, or P4P as it is sometimes called, can offer value, but the authors of the examination contend that “on its own, it cannot adequately guarantee quality, and, in fact, can create an environment where true quality can become secondary to the quest to satisfy performance measures” that would result in a monetary benefit.

The authors examine some of the quality improvement undertakings that have been pursued in recent years in New York State aimed at achieving systemic changes. These pursuits have focused on staff training and enhancing staff capabilities, and have resulted in dramatic improvement in quality outcomes.

“Supporting improvements in structure and process does indeed result in outcome improvement, and for a broad range of providers,” the paper’s authors assert.

Meanwhile, P4P ventures face a number of obstacles that can bar their effectiveness. These include not being able to “risk-adjust” outcomes, creating too narrow a focus rather than viewing patient care as a holistic enterprise and allowing the potential for providers to “game” the system with strategies that improve outcomes without fundamentally improving structures and processes.

The authors also turn the P4P equation on its head, stating that it could be looked at not as paying providers more for what they should be doing in the first place, but paying less to those who don’t make the grade.

They write:

“Looked at from that perspective, it’s a counterintuitive approach where ‘the rich get richer and the poor get poorer.’ There must be a better way to help out struggling nursing homes without ‘punishing’ them. This may be the biggest weakness in value-based purchasing.”

The authors recommend that quality nursing home care can be attained through a total quality management approach that has the appropriate infrastructure, an empowered staff and an efficient process. A “system” must be in place to achieve consistent quality, they argue, not narrow resource re-allocations that could occur under value-based purchasing.

The paper was prepared by: Arthur Y. Webb, president and CEO; Herbert H. Fillmore, executive vice president, and Allison Silvers, director of strategic grants. Also contributing were Ellen Flaherty, director for quality improvement, and Robert Zorowitz, M.D., medical director.

Copies of the background paper may be downloaded by going to the Village Care of New York New Horizons Policy Forum website at, or can be obtained by calling (212) 337-5668.

Village Care of New York is a major provider of care and services in New York City for older adults and persons living with HIV/AIDS.