Paying for performance in theory and practice: What can we learn from the England and the USA?

There is a growing trend amongst policy makers internationally to link payment to health care providers (as individuals and/or organisations) to the achievement of quality goals. This is despite the fact that evidence for the efficacy of such initiatives is at best, weak. Much of the literature on changes to incentive structures is informed by economic theory, which tends to focus on individuals and often ignores important contextual factors. This paper reports findings from a number of mixed method studies undertaken by the author, examining changes to incentive structures in English hospitals, community providers and primary medical care settings. The paper describes these various initiatives (the Quality and Outcomes Framework, Advancing Quality, Commissioning for Quality and Innovation and Best Practice Tariffs) highlighting differences in their design and implementation, as well as comparing these with findings from the study of US initiatives (Integrated Healthcare Association P4P, Hospital Quality Incentive Demonstration). It then goes on to illustrate the importance of adopting a more sociologically informed approach to the analysis of such initiatives. This paper describes the impact of these various initiatives on practice and performance, drawing on institutional theory. It is suggested that ‘pay for performance’ initiatives should be interpreted in the context of shared beliefs and taken for granted assumptions, with recent reforms potentially disrupting dominant institutional logics. From this perspective, the failure of some initiatives to make an impact is understandable. Furthermore, this highlights that increasing the impact of these reforms is not simply a matter of increasing the size of performance incentives. Perhaps more worrying still is the fact that even where performance does appear to have improved the failure to disrupt dominant institutional logics means that this improvement is unlikely to be sustained.