Financial incentives successfully improve hospital mortality rates

23 November 2012

A study of hospitals across Northwest England has shown that a combination of competition and collaboration, with financial incentives for success, gave a significant fall in mortality rates for certain conditions.

Health experts and economists from the Universities of Nottingham, Manchester, Cambridge and Birmingham examined how the introduction of a scheme, called Advancing Quality, that paid hospitals bonuses based on measures of quality, affected the delivery of emergency care.

The scheme was associated with a relative reduction in the mortality rate of 6% over 18 months — equivalent to almost 900 lives saved.

Co-author Professor Ruth McDonald, Professor of Health Innovation and Learning at Nottingham University Business School, said the findings could have major policy implications. She said, “Pay-for-performance schemes are being widely adopted, yet until now there’s been little evidence that they improve patient outcomes. Our findings suggest they can make a positive and significant difference but that whether they do so depends very much on how they’re designed and implemented.”

Reasons for success

Professor McDonald, a Professor of Health Innovation and Learning, said the findings were in marked contrast to those of similar studies in America. She said: “Research on pay-for-performance initiatives in the US has shown their effect on hospitals’ care processes to be at best modest and short-term. Evidence of an effect on patient outcomes has been even weaker, with the largest scheme apparently having no impact on patient mortality. So we have to ask ourselves what made a difference here — and it seems the answer most likely lies in how Advancing Quality was implemented.

“The combination of a competitive framework and the opportunity to get together to solve shared problems seems to be key to its success. In spite of the ‘tournament’ format of the initiative, staff from all the participating hospitals met regularly to discuss improvements. This kind of interaction was very different from the approach in the US, where large-scale ‘webinars’ were chosen over face-to-face meetings.

“All of this suggests that how these schemes are put into practice and the context in which they’re introduced can be crucial to patient outcomes.”

The research team compared data from the North West with figures from around the UK to obtain a highly detailed picture of Advancing Quality’s impact. In total, information for nearly a million patients was examined, including more than 134,000 at the hospitals that took part in the scheme.

A nationwide pay-for-performance system based on withholding payments rather than paying bonuses now operates at all NHS hospitals. Professor McDonald added: “These schemes can seem very simple on paper, but in practice they can be very difficult to implement successfully.”

Further information

Sutton M et al. Reduced Mortality with Hospital Pay for Performance in England. New England Journal of Medicine. 2012;367:1821-8. DOI: 10.1056/NEJMsa1114951


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