Study: Pay-For-Performance & Value-Based Healthcare

Leave a Comment
October 3rd, 2013

Study: Pay-For-Performance Incentives

The New York City Department of Health & Hygiene recently studied the effects of implementing pay-for-performance incentives and how they can initiate a value-based healthcare system. The study was conducted amongst a sample of small (<10 clinicians) healthcare clinics – each must be using EHR systems, serve at least 200 patients, 10% being uninsured or on Medicaid.

Clinics were awarded performance-based incentives for reaching certain goals and clinical outcomes (specifically for improvements amongst cardiovascular care). Negative outcomes were not penalized. Payments were made directly to the provider facility based on the number of patients who achieved positive outcomes and were treated according to set care guidelines.

As a result, the study saw improvements in patient outcomes amongst providers who received incentives, and providers saw growth towards greater market share. (The full study can be accessed here.)

Analysis: Value-Based Healthcare

The study provides food for thought for healthcare providers and payers. As payers and patients begin to aggressively push to reduce healthcare costs and improved quality, the move from fee-for-service towards pay-for-performance value-based care seems inevitable.

The idea of value-based care is focused around the patient with the goal of improving the quality of care provided throughout the entire cycle, while reducing costs and ultimately building a more efficient healthcare system. For providers, this means adhering to set guidelines and treatment algorithms within the care process, while being rewarded for achieving improvements in patient outcomes, i.e. quicker recoveries, fewer readmissions, lower infection rates, and fewer medical errors.

To facilitate the change towards value-based care, providers will have to make the effort towards greater standardization in the care they provide, whilst eliminating variation and error. By implementing a new care delivery system known as a ‘value agenda’, hospitals and healthcare facilities can evolve into a value-based provider. The six key components of the ‘value agenda’ are:

Value-Based Healthcare


  1. Integrated Practice Units – IPU’s are a network of clinical and non-clinical personnel dedicated towards providing the full care-cycle for a certain patient population and their needs.
  2. Cost and Outcomes Measurement – Measuring and reporting outcomes that are valuable to payers, patients, and providers can help increase transparency and data-efficiency, whilst increasing pressures towards improving quality and adopting practices that yield the demanded outcomes.
  3. Bundled Payments – Bundled payments shifts provider invoicing towards charging for the full care cycle, overall care, or primary and preventative care for a defined patient population. This can reduce redundant charges and multiple service lines, improving cost-reductions.
  4. Integrated Care Delivery – Integrating care requires providers to define their scope of services provided, concentrate volumes to centralized location, allocate services to the appropriate location, and integrate all patient data throughout the network.
  5. Expanded Services – To increase transparency and market share, providers must strategically expand as IPUs to ensure that quality care is provided at a comparable standard.
  6. An Information Technology Platform – At the foundation of this is a value-enhancing IT platform that can facilitate all integration within the IPU, allowing all parties access to data, whilst tying together all components of the value-agenda.

As a result, pay-for-performance models can help providers respond to the demands for cost-reductions while simultaneously improving the quality of care delivered. By improving efficiency and becoming value-based, healthcare providers can enter contracting discussions with greater leverage due to a stronger market share, and a more valuable reputation.


  • Being a contractor for over 30 years, my pay is based around value and performance. Bottom line if I dont provide value to my customer they have the choice to move on to the next contractor. If I dont perform to a positive outcome, well I dont get paid.
    Least to say this not only gives incentive, you become a better provider of positive outcomes.
    I have spent over four years researching medical services that can better the healthcare landscape mainly medical tourism. Reading this article has opened my eyes to what domestic healthcare could evolve to if this information could reach the right people.
    I invite the author of this post to be a guest writer for my blog to help get the word out

    • admin says:

      Hi Terry. We are very grateful that you appreciate our work. We here at PayerFusion strive to not only offer our service, but also our knowledge and expertise. If you'd like to connect with someone from our Marketing Department, kindly email us at further explaining your inquiry. Thanks!