Health affairs
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The payment approach known as "pay-for-performance" has been widely adopted with the aim of improving the quality of health care. Nonetheless, little is known about how to use the approach most effectively to improve care. We examined the effects in 260 hospitals of a pay-for-performance demonstration project carried out by the Centers for Medicare and Medicaid Services in partnership with Premier Inc., a nationwide hospital system. ⋯ However, after five years, the two groups' scores were virtually identical. Improvements were largest among hospitals that were eligible for larger bonuses, were well financed, or operated in less competitive markets. These findings suggest that tailoring pay-for-performance programs to hospitals' specific situations could have the greatest effect on health care quality.