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Pay for Performance

Address the following as it pertains to Pay for Performance:

A one paragraph definition/description of Pay for Performance.
How pay for performance might change the way health care leaders manage their organizations.

What actions health care administrators should take to better prepare for this trend?

How consumer-directed health care fits with Pay for Performance?

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This is an interesting project. One approach to help you with a project like this one is to look at each question from various sources, which you can then draw on for your final copy. This is the approach this response takes. I also attached two supporting articles and extra information at the end of this response, some of which this response is drawn.

The paper will be organized according to the questions (body), and will also have an introduction (include a purpose statement) and conclusion (restate purpose statement and sum up main points).

Let's take a closer look.


1. A one paragraph definition/description of Pay for Performance.

Pay for performance (P4P) in the health care arena is intended to improve the management of patient outcomes. It generally is defined as providers' supplying data on specified quality measures and purchasers' paying for health services differentially based on the outcomes resulting from those preset measures (

This "payment model rewards physicians, hospitals, medical groups, and other healthcare providers for meeting certain performance measures for quality and efficiency. Disincentives, such as eliminating payments for negative consequences of care (medical errors) or increased costs, have also been proposed. In the developed nations, the rapidly aging population and rising health care costs have recently brought P4P to the forefront of health policy discussions. Pilot studies underway in several large healthcare systems have shown modest improvements in specific outcomes and increased efficiency, but no cost savings due to added administrative requirements. Statements by professional medical societies generally support incentive programs to increase the quality of health care, but express concern with the validity of quality indicators, patient and physician autonomy and privacy, and increased administrative burdens" (

2. How does pay for performance might change the way health care leaders manage their organizations?

To be successful, certain changes might need to occur. In order to help improve the quality of care, for example, leaders must align the P4P's goals of medical professionalism. Added ethical issues need consideration. Avoid initiatives that provide incentives for a few specific elements of a single disease or condition, however, may neglect the complexity of care for the whole patient, especially the elderly patient with multiple chronic conditions. Such programs could also result in the deselection of patients, "playing to the measures" rather than focusing on the patient as a whole, and misalignment of perceptions between physicians and patients. The primary focus of the quality movement in health care should not be on "pay for" or "performance" based on limited measures, but rather on the patient. The American College of Physicians hopes to move the pay-for-performance debate forward with a patient-centered focus?one that puts the needs and interests of the patient first?as these programs evolve.
Leaders should prepare by:

1. Following the guidelines set by AMA (see attached guidelines)

The American Medical Association (AMA) has published principles for pay-for performance programs, with emphasis on voluntary participation, data accuracy, positive incentives and fostering the doctor-patient relationship (see attached guidelines), and detailed guidelines for designing and implementing these programs. Leaders should follow these guidelines when implementing incentives, which will be in alignment with the following five AMA principles:

1). Ensure quality of care - Fair and ethical PFP programs are committed to improved patient care as their most important mission. Evidence-based quality of care measures, created by physicians across appropriate specialties, is the measures used in the programs. Variations in an individual patient care regimen are permitted based on a physician's sound clinical judgment and should not adversely affect PFP program rewards.

2). Foster the patient/physician relationship - Fair and ethical PFP programs support the patient/physician relationship and overcome obstacles to physicians treating patients, regardless of patients' health conditions, ethnicity, economic circumstances, demographics, or treatment compliance patterns.

3). Offer voluntary physician participation - Fair and ethical PFP programs offer voluntary physician participation, and do not undermine the economic viability of non-participating physician practices. These programs support participation by physicians in all practice settings by minimizing potential financial and technological barriers including costs of start-up.

4). Use accurate data and fair reporting - Fair and ethical PFP programs use accurate data and scientifically valid analytical methods. Physicians are allowed to review, comment and appeal results prior to the use of the results for programmatic reasons and any type of reporting.

5). Provide fair and equitable program incentives − Fair and ethical PFP programs provide new funds for positive incentives to physicians for their participation, progressive quality improvement, or attainment of goals within the program. The eligibility criteria for the incentives are fully explained to participating physicians. These programs support the goal of quality improvement across all participating physicians.

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Solution Summary

Several aspects of the Pay for Performance are explored e.g. definition, ways Pay for Performance might change the way health care leaders manage their organizations, the actions health care administrators should take to better prepare for this trend, and ways consumer-directed health care fits with Pay for Performance. Supplemented with two articles on pay for performance.