Can Money Buy Quality? Physician Response to Pay for Performance

Originally published by the Center for Studying Health System Change (HSC), 2006.

Physician Response to Pay-for-Performance Incentives

Pay-for-performance programs, which link physician compensation to measurable quality indicators, were gaining traction as a strategy for improving health care quality. HSC research examined how physicians were responding to these financial incentives and found that while the concept was generating interest, practical implementation faced significant challenges. The amounts of money at stake in most pay-for-performance programs were relatively small compared with physicians' overall revenue, raising questions about whether the incentives were large enough to motivate meaningful changes in clinical behavior.

Physicians also expressed concerns about the quality measures used in these programs, questioning whether the measures adequately captured the complexity of clinical care and whether the data used to assess performance were accurate and risk-adjusted. Some physicians worried that pay-for-performance could lead to unintended consequences, such as physicians avoiding sicker patients whose conditions made it harder to achieve performance targets. Despite these concerns, many physicians acknowledged that linking some portion of compensation to quality outcomes was a reasonable direction for the profession, provided the measures were clinically valid and the programs were designed to reward genuine improvement rather than simply penalizing physicians who served more complex patient populations.

Sources and Further Reading

Center for Studying Health System Change, "Can Money Buy Quality? Physician Response to Pay for Performance" (2006).