Annals of Health Law
VALUE BASED PURCHASING
utility of quality payment incentives. 167 A similar program in the United
Kingdom a few years ago that utilized financial incentives to reduce costs
and improve quality proved not to be as successful as anticipated. 168
Granted, physicians in the United Kingdom who work for the National
Health Service (NHS) typically work on a salary basis, 169 rather than a fee-for-service basis; however, there are some applicable lessons for the United
States. Starting in 2004, NHS committed more than $3 billion toward a
program that would pay physicians bonuses of as much as twenty-five
percent of their total income. 170 To qualify for this bonus, physicians had to
meet or exceed some or all of the 135 quality benchmarks that were predetermined by NHS. 171
Researchers at Harvard studied this UK program to see if they could
learn any lessons about the effectiveness of pay for performance on a
national scale. Rather than look at all 136 quality measures, the researchers
choose to focus on only a few pertaining to hypertension, one of the most
undertreated, expensive, and common diseases. 172 The results were
disappointing, to say the least. After reviewing close to 500,000 primary
care patient records, researchers determined that the NHS’ pay for
performance program had no effect on outcomes. 173 Patients were not any
healthier than they would have been if the financial incentive program
hadn’t existed. 174 Surprisingly, the physicians were not motivated (or
perhaps unable) to change their behavior with regard to costs and quality in
response to financial incentives. 175
Unfortunately, the study did not offer suggestions of how exactly
financial incentives could be used to positively alter physician behavior.
“Money by itself doesn’t buy health,” concluded Stephen Soumerai, co-
167. While there have been pay for performance success stories in health care, these
have been in the private sector and on a much smaller scale. As such, the successes and
lessons learned from those models cannot necessarily be applied to the Program and the
Initiative. See Gosden T. Forland, et al., Capitation, Salary, Fee-for-Service and Mixed
Systems of Payment: Effects on the Behaviour of Primary Care Physicians., COCHRANE
DATABASE OF SYSTEMATIC REVIEWS 3 (2006).
168. Kate Pickert, Money Isn’t Everything, Even to Doctors, TIME, Jan. 26, 2011,
available at http://healthland.time.com/2011/01/26/money-isnt-everything-even-to-doctors/.
169. Medical Pay, NHS EMPLOYERS, http://www.nhsemployers.org/
(last visited Jan. 4, 2012).
170. Pickert, supra note 168.