Pay for performance in health care: strategic issues for Australian experiments

In response to persisting quality problems in clinical practice, policymakers in various countries, including Australia, are experimenting with pay-for-performance (P4P) schemes that tie a portion of provider payments to performance on measures of quality. Rigorous studies of P4P efficacy are relatively few, with many focused on preventive care in ambulatory settings and many suggesting only modest gains in performance. Several key issues need to be considered in determining the optimal design and implementation methods for P4P programs, including: the choice of clinical practice area; the size of financial incentives and who should receive them; the selection of quality measures and performance thresholds that determine incentive eligibility; data collection methods; and the best mix of financial and non-financial incentives. A proposed framework to guide Australian initiatives in P4P emphasises early clinician involvement in development, a phased approach from "pay-for-participation" in performance measurement to P4P within several pilot demonstration programs, and investment in clinical information technology.