Hospital Impact: Study illustrates the shortfalls of financial incentives to provide better care

A new study adds further evidence to argument that financial incentives are not the answer to improving care, safety and experience for patients and families.
headshot of Thomas Dahlborg

A study published in the latest issue of Health Affairs found that certain Centers for Medicare & Medicaid Services initiatives play only a small role in improving patient care.

The CMS initiatives studied?

Tying value-based purchasing (VBP) payments to Consumer Assessment of Healthcare Providers and Systems (CAHPS). Or in other words, assessing the impact of financially incentivizing healthcare leaders, physicians and others within the healthcare system to improve patient care and experience as measured by CAHPS.

Now are CAHPS and patient experience important? Absolutely. As the study points out, “the bulk of the evidence” suggests that high performance on these measures is associated with high performance in other areas of clinical quality.

However, the researchers also note that rewards offered to most hospitals under the VBP program are “quite modest and thus too small to motivate change.”

And yet again, I am reminded of the conversation I shared in a Hospital Impact post from last spring:

From a good friend and healthcare quality leader: “Once we have a financial model in place, our ability to improve healthcare provision will be much more attainable.”

And my response, “It requires a financial model to be in place prior to doing the right thing? We cannot wait. Patients are being wounded. Families are being harmed. Communities are being hurt. … We need to identify those people who truly value patient safety--those people who are not reliant on a new financial incentive to do what is right, those people who truly care--and ensure they are positioned to both lead and serve in an effort to improve the healthcare system.”

So I ask today, do we really want—do we really need—to be financially motivated to provide the best care for our patients and families, for our communities?

And even if the answer is yes for some, will financial incentives actually help us achieve our goals? So far, according to the study referenced above, the answer is no.

What’s more, there can be consequences for incentivizing the wrong goals.

As a 2012 study published in JAMA Internal Medicine notes: “Higher patient satisfaction was associated with less emergency department use but with greater inpatient use, higher overall healthcare and prescription drug expenditures, and increased mortality.”

All of which leads me to conclude:

  • Financial incentives are not the answer to improving care, safety and experience for patients and families.
  • Financial incentives are not the answer to creating a compassionate, engaging, relationship-centered healthcare model.
  • Financial incentives will not lead to the transformation of a healthcare system to a "healthCARING" system.
  • Financial incentives may (or may not) temporarily change outcomes, but they do not change hearts. And that is what we need.

True healthCARING driven by caring healthcare leaders, physicians, nurses and others will be long lasting and will truly innovate healthcare.

And isn’t that what we all truly want for all those we care for and about?

Thomas H. Dahlborg, M.S.H.S.M., is an industry voice for relationship-centered compassionate care and servant leadership. He is a keynote speaker, author, consultant and adviser and is the president of the Dahlborg Healthcare Leadership Group.