Unintended Consequences of Pay-For-Performance Based on Readmissions

Introducing fines for readmission rates crossing a certain threshold has been associated with reduced readmissions. Distilling a rather wordy commentary by Friebel and Steventon,[1] there are problems with the policy since it might not lead to optimal care:

  1. The link between quality of care and readmission is not good according to most studies, so that there is a risk that patients who need readmission will not get it.
  2. In support of the above, less than a third of readmissions are for the condition that caused the previous admission (which is not to say that none are preventable, but it suggests that a high proportion might not be).
  3. Risk-adjustment is at best imperfect.
  4. And this probably explains why ‘safety net’ hospitals caring for the poorest clientele come off worst under the pay-for-performance system.

I refer it my iron law of incentives – ‘only use them when providers truly believe that the target of the incentive lies within their control.’

— Richard Lilford, CLAHRC WM Director


  1. Friebel R, Steventon A. The multiple aims of pay-for-performance and the risk of unintended consequences. BMJ Qual Saf. 2016.

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