Pay for performance programs in Australia: A need for guiding principles

Abstract

Pay-for-performance (P4P) programs which reward clinical providers with incentive payments based on one or more measures of quality of care are now common in the United States and the United Kingdom and it is likely they will attract increasing interest in Australia. However, empirical evidence demonstrating effectiveness of such programs is limited and many existing programs have not had rigorous outcome evaluation. To maximise success, future P4P programs should incorporate the lessons and insights obtained from previous experience. Based on a review of published trials, program evaluations and position statements, the following principles that may guide future program design and implementation were synthesised: 1) formulate a rationale and a business case for P4P; 2) use established evidence-based performance measures; 3) use rigorous and verifiable methods of data collection and analysis; 4) define performance targets using absolute and relative thresholds; 5) use rewards that are sufficient, equitable and transparent; 6) address appropriateness of provider responses and avoid perverse incentives; 7) implement communication and feedback strategies; 8) use existing organisational structures to implement P4P programs; 9) attribute credit for performance to participants in ways that foster population-based perspectives; and 10) invest in outcomes and health service research. Recommendations flowing from these principles relevant to Australian settings are provided.