Improving Health Care from Outside Organisations

Policy makers / health system designers have limited tools at their disposal if they want to improve the quality and efficiency of health care. Broadly, they can have regulatory/inspection regimes and/or they can collect data and use it either to exert moral force or as a basis for incentives – payments and fines.

The CLAHRC WM Director does not know how effective regulation and inspection is, and will try to find literature on this point. His interim conclusion is that regulation and inspection is more effective at identifying and weeding out poor performance, than at promoting excellence. Public reporting of data alone, with no further renewal or sanction, is effete (minimally effective or ineffective), as discussed in previous blogs.[1] Incentives may introduce perverse behaviour (for a lively account outside medicine see Steven Levitt and Stephen Dubner’s book ‘Freakonomics’).[2] How can we maximise the intended effects of incentives while minimising perverse effects? Roland and Dudley provide a sophisticated overview of the subject, building on systematic reviews of applied studies and also on reviews of laboratory experiments to provide deeper psychological insights.[3] Some headline findings:

  1. Never, never, ever use an incentive where the targeted workers do not know what to do to meet the incentivised target. Try to involve professionals in the design of their own incentives.
  2. Do not to use incentives that the targeted professionals think are unfair. For example, do not base incentives on end-points where the noise-to-signal ratio is very poor (e.g. standardised mortality ratios).[4]
  3. Public reporting alone has had some successes, but a recent article (featured in a previous CLAHRC WM News Blog) found no improvement in a large sense.[5]
  4. Pay-for-Performance can almost certainly lead to certain patients being neglected or denied treatment. They need to be targeted specifically at the sickest/most vulnerable.
  5. Negative spill-over effects on processes not measured is a real risk – see our recent News Blog on a terrible article in a truly terrific journal.[6] In particular, targets can displace patient-centred care unless patient experience is also captured in a ‘basket’ of measures.
  6. Wherever possible use long-term horizons to embed the desired behaviour.

Public reporting and pay-for-performance generally provide modest benefit, even when the major pitfalls have been avoided. They cannot be relied upon as the sole method to improve care. In the long-term, cultivating a dedicated, highly motivated and skilled workforce is the bedrock of practice.

— Richard Lilford, CLAHRC WM Director


  1. Lilford RJ. Another Study of Pay for Performance in Hospitals. NIHR CLAHRC West Midlands News Blog. 2 September 2016.
  2. Levitt SD & Dubner SJ. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York, NY: William Morrow. 2005
  3. Roland M & Dudley RA. How Financial and Reputational Incentives Can Be Used to Improve Medical Care. Health Serv Res. 2015; 50(s2): 2090-115.
  4. Girling AJ, Hofer TP, Wu J, et al. Case-mix adjusted hospital mortality is a poor proxy for preventable mortality: a modelling study. BMJ Qual Saf. 2012; 21(12): 1052-6.
  5. Figueroa JF, Tsugawa Y, Zheng T, Orav EJ, Jha AK. Association between the Value-Based Purchasing pay for performance program and patient mortality in US hospitals: observational studyBMJ. 2016; 353: i2214.
  6. Lilford RJ. A Disappointing Article. NIHR CLAHRC West Midlands News Blog. 30 Sept 2016.

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