The Toxicity of Pay for Performance

Berwick DM. The toxicity of pay for performance. In: Measuring Clinical Care — A Guide for Physician Executives. Tampa, Florida: American College of Physician Executives; 1995. Also appears in: Quality Management in Health Care. 1995;4(1):27-33.
Should health care providers be paid on a merit basis? This article describes the complexity and shortcomings of a pay for performance system. The author addresses this system’s influence on customer needs, improvement opportunities, goals, and innovation.
Learning Objectives
After reading this article, students will be able to:
  • Evaluate the consequences of a pay for performance structure within the US health care system.
Discussion Group Questions
  1. Would you like to be a provider working in a pay for performance system? Why or why not?
  2. The author mentions several other factors that affect an individual’s performance. If the health care provider is not in complete control, how should the manager hold the individual accountable for his/her work?
  3. Imagine you are the patient. How would you feel knowing your provider was being paid based on his or her performance? Would it make you more or less comfortable?
  4. The author notes, “Pay for performance slows change…” Do you agree or disagree? Why or why not?
  5. Does pay for performance work effectively in other industries? Why or why not?
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