August, 2008 - SUPPORT Summary of a systematic review | print this article |

Does pay-for-performance improve the quality of health care?

Explicit financial incentives have been proposed as a strategy to change physician and healthcare system behaviour. Linking payments at different levels in the health system to performance on quality measures is currently being used by a number of organisations in the USA and other high-income countries. The incentives have been implemented at different levels, including the payment system; the provider group; and the individual physician.

Key messages

  • Compared to no incentives, the use of explicit financial incentives at different levels in the health system might:

          − Decrease hospital admission rates or death of nursing home patients;

          − Produce adverse selection of users;

          − Improve access to community mental health care;

          − Improve some processes of care such as influenza immunisation rates and diabetes care.

  • However, the evidence is of low or very low quality and in most of the studies there was a positive effect on some outcomes and no effect on others.
  • Little or no evidence is available regarding the specific design elements of effective pay-for-performance schemes, including: the optimum magnitude, frequency, and duration of financial incentives; and the performance measures and standards to be used.
  • Little or no evidence is available regarding the cost-effectiveness of pay-forperformance schemes.
  • Factors that need to be considered in assessing whether the intervention effects are likely to be transferable to other settings include the availability of:

          − Resources to finance the incentives beyond restructuring existing payment systems;

          − Routine data on quality of care.


Linking payments at different levels in the health system to performance on quality measures may be a strategy for achieving high-quality health care. This summary is based on a systematic review published in 2006 by Petersen and colleagues. The summary focuses on the effects of explicit financial incentives on different measures of quality of care at different levels of the health system.

About the systematic review underlying this summary

Summary of findings

The review included 17 studies evaluating explicit financial incentives on quality of care measures. Four of them were conducted in North America while the other 13 studies appear to have been carried out in high-income settings (mostly the USA).

1) Explicit financial incentives at the payment-system level compared with no incentives

There was no explicit definition of “payment-system level”, but it seems to be a nonprovider organisation commissioning specific services on behalf of its clients from a provider organisation. The two studies identified employed different designs (1 randomised trial and 1 controlled before-after study), and focused on very different populations (nursing home patients versus Medicaid Office of Substance Abuse clients) in the US health system.

  • The overall effect of financial incentives at the payment-system level on access to care is inconclusive, showing improved access in one study and “adverse selection” in the other.
  • There is low quality evidence of improved outcomes for patients in nursing homes that received financial incentives.



2) Explicit financial incentives targeted at provider groups compared with no financial incentives

Nine studies (5 randomised trials, 2 controlled before-after studies and 2 crosssectional surveys) were identified, mostly from the USA. Eight of these evaluated the effects of financial incentives on process measures of quality, mainly related to preventive care. The other study aimed to improve access to services offered by community mental health centers.

  • There is very low quality evidence that financial incentives at the provider level improve access to care, compared with no incentives.
  • There is very low quality evidence that financial incentives at the provider level improve process of care measures for preventive care, compared with no incentives.



3) Explicit financial incentives at the individual physician level compared with no intervention

Six studies (3 randomised trials, 1 controlled before-after study and 2 cross-sectional surveys) evaluated financial incentives at the individual physician level. In the four experimental studies the incentive was a bonus or an enhanced fee-for-service payment given at different intervals. The magnitude of the incentive was variable and depended on the type of behaviour targeted (range: US $50 to US $7500).

  • Financial incentives targeted at physicians might improve patients’ experience of primary care services in a US setting, but the evidence is of very low quality and based on a cross-sectional survey.
  • There is very low quality evidence that financial incentives targeted at physicians might improve documentation of specific processes of care (e.g. immunisation status).

Relevance of the review for low-income countries

Additional information

Related literature

This report provides an overview of the evidence for both supply and demand side results-based financing (pay for performance) in the health sector with the primary focus on low and middle-income countries: Oxman AD, Fretheim A. An overview of research on the effects of results-based financing. Report Nr 16-2008. Oslo: Nasjonalt kunnskapssenter for helsetjenesten, 2008.


This paper provides a discussion of both supply and demand side pay for performance and case studies from low and middle-income countries:Eichler R. Can ”Pay for Performance” Increase Utilization by the Poor and Improve the Quality of Health Services? Discussion paper for the first meeting of the Working Group on Performance-Based Incentives. Washington DC: Center for Global Development, 2006; 5.


A general analysis about payment for performance in health care with useful reference is presented in:Mannion R, Davies HTO. Payment for performance in health care. BMJ 2008;336:306-308.


This study reports findings of a cross-sectional survey for the first-year of the national pay-forperformance program in family practices in the UK: Doran T, Fullwood C, Gravelle H, Reeves D, Konropantelis E, Hiroeh U, Roland M. Pay-for-Performance Programs in Family Practices in the United Kingdom. N Engl J Med 2006;355:375-84.


This summary was prepared by

Tomás Pantoja, Escuela de Medicina, Pontificia Universidad Católica de Chile.


Conflict of interest

None declared. For details, see:



This summary has been peer reviewed by: Laura Petersen, USA; Paul Smithson, Tanzania; Atle Fretheim, Norway; Tracey Perez Koehlmoos, Bangladesh; Maylene Beltran, Philippines.


This summary should be cited as

Pantoja T. Does pay-for-performance improve the quality of health care? A SUPPORT Summary of a systematic review. August 2008.