Do Hospitals Alter Patient Care Effort Allocations Under Pay-for-Performance?

This paper looks at whether hospitals increase efforts on easy tasks relative to difficult tasks to improve scores under pay-for-performance (P4P) incentives. Using the Centers for Medicare and Medicaid Services Hospital Compare data, FY 2003-2005, and 2003 American Hospital Association Annual Survey data, we classified measures of process compliance targeted by the Premier Hospital Quality Incentive Demonstration as easy or difficult to improve based on whether they introduce additional per-patient costs. We compared process compliance on easy and difficult tasks at hospitals eligible for P4P bonus payments relative to hospitals engaged in public reporting using random effects regression models.

We found P4P hospitals did not preferentially increase efforts for easy tasks in patients with heart failure or pneumonia, but they did exhibit modestly greater effort on easy tasks for heart attack admissions. There is no systematic evidence that effort was allocated toward easier processes of care and away from more difficult tasks.