COMMENT XXXX


Paying for


performance in the NHS – what can we learn from the latest evidence?


Ruth McDonald, professor of governance and public management at Warwick Business School, argues that hospital pay for performance schemes need more evaluation.


L


inking financial rewards to health outcomes or proxy outcomes has become


increasingly popular in the NHS in recent years. This increased adoption of ‘Pay for Performance’ (PfP) is occurring despite a scant evidence base. The enthusiasm for ‘PfP’ is not confined to the English NHS; across the globe, various health systems are experimenting with schemes that seek to align financial incentives with policy goals.


The question asked by a lot of people is ‘do PfP schemes work?’


its recent national ‘PfP’ initiatives. ‘Not exactly a resounding success’


But this is the wrong question, since it fails to recognise that these initiatives are all different. What we need to do is to look at the features of the individual schemes – how they are designed and implemented and in what context – and assess impact to work out how and to what extent a scheme works. Independent evaluation of this sort is crucial if we are to identify lessons about particular initiatives and ‘PfP’ approaches more generally. And to be fair to the Department of Health, it has commissioned a number of such evaluations of


18 | national health executive Sep/Oct 14


“Incentives are blunt instruments and in a context of complex and multiple policy goals, they can have unintended consequences.”


Our evaluation of new incentive structures in contracts for GPs, pharmacists and dentists suggested these were not exactly a resounding success. Incentives are blunt instruments and in a context of complex and multiple policy goals, they can have unintended consequences. Nevertheless the policy of ‘Pay for Performance’ was continued and expanded, aiming to change the practice of other groups of staff, such as hospital doctors and nurses. Unlike the primary care professionals who were on


the receiving end of new incentive contracts and who work in the independent sector, these are public sector employees. Here the approach has been a little different, with organisational (as opposed to personal) income linked to performance.


The Commissioning for Quality and Innovation Payment Framework, or CQUIN as it is known,


makes a proportion of income conditional on the achievement of quality improvement and innovation goals. In the first year this proportion was 0.5%. This was increased to 1.5% in the second year of the scheme, which makes some sense as there is evidence that at around this level, the people who manage organisations really pay attention. (Though whether suddenly increasing their exposure to financial risk results in thoughtful and considered responses designed to improve quality is a moot point!) More recently the percentage was increased to 2.5% and David Nicholson, the former NHS chief executive, said before he retired that he wanted to see this rise to 4 or 5%, presumably due to fears that the 2.5% wasn’t having the desired effect.


Best Practice Tariffs


Best Practice Tariffs (BPTs) were introduced in 2010. These are designed to improve care by paying more for care which is in line with ‘best practice’ and less for care which is not. Our evaluations of CQUIN and BPTs found that the former did not appear to improve quality in the way policy makers intended. BPTs appeared to be more promising, but in both cases, our evaluations were limited by data issues, which made drawing robust conclusions difficult.


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