Pros and Cons of Pay-for-Performance – Health System Example

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"Pros and Cons of Pay-for-Performance" is an important example of a paper on the health system. Currently,   the  United States  healthcare system is  fragmented across  different practices and settings. This makes it necessary for health organizations  to reward health workers for their performance.   The  pay for performance that  programs are intended to offer financial incentives  to health workers  if their work is  outstanding  (Roland,   2006). The system is designed to enhance efficiency and  the  quality  of  services in health organizations. A recent example of pay for performance establishment is the  Agency for  Healthcare  Research and  Quality (AHRQ). This essay focuses on the implications of pay for performance  policies for  health workers by considering  the  pros  and cons  of such policies.   Pros  Pay for performance is a timely system in the healthcare sector.

The current trend of privatization of the healthcare system  requires  a system that monitors  the performance of health workers.   The  system  should also  provide  a forum  for evaluating the performance of health workers.   Also, health workers are humans and,   therefore,   they respond positively to acts of appreciation. Payment for performance is an act of appreciation; therefore,   it contributes to  the quality of  the  workers’   performance.   The healthcare system is prone to irregularities resulting from unclear work ethics.   Therefore, the  payment for performance programs  enhances  accountability and transparency in the healthcare sector  (Rokeach,   2007). The  scheme provides  parameters that can be used to measure the level of transparency and accountability in a health institution.   Transparency and accountability translate into quality services and performance  of  health workers.         Cons  Quality healthcare  services are in the interests  of all the stakeholders  in the  healthcare sector.   However, paying for  the  improvement of the health sector is  arguably  inappropriate.   Quality  healthcare is among the basic rights entitled to every citizen  of the USA.

Therefore,   paying for  the  improvement of the healthcare system is an indication that people do not understand their basic rights  (Trude,   2006). Also, the system indicates that people tolerate poor performance by  health workers,   and, therefore,   the  latter  are not challenged to improve  their performance  (CMS, 2005).     Pay for performance  policies and programs  contribute to social class differences,   so they are  not appropriate for national unity  (Vladeck, 2008).

This is because some states  and societies believe in the significance of financial incentives  more  than other states do.   For  instance,   the Washington  State  leads other states into believing that financial incentives can change human behaviors. The diagnosis-related  groups (DRG)  system is  among the failed hospital payment systems in the state  (Geoffrey,   2007). Although DRG was intended to enhance quality performance through financial incentives,   it did not meet its objectives.   The system proved effective  in terms of  the  payment  received  but an  insufficient  tool for measuring the quality  of  performance.   Conclusion  Pay for performance is a system that was rolled in the US to promote quality  healthcare  services by  offering  financial incentives to  health workers. The system acts as a parameter for measuring the performance of  health workers  and health institutions.   Besides,   the system encourages  health workers  to add effort to their performance,   thus improving health services in the country.   On the other hand, quality healthcare is a fundamental right of every citizen,   and thus paying for performance  jeopardizes  people’ s rights  to  quality  healthcare services


CMS (2005). Medicare demonstration shows hospital quality of care improves with payments tied to quality. Retrieved from

Geoffrey, B. (2007). Pay for performance incentive programs in healthcare. Retrieved from:

Rokeach, M. (2007). The nature of human values. New York: Free Press.

Roland, M. (2006). Presentation to the 4th annual World Congress Leadership Summit on healthcare quality and pay-for-performance. Boston: MA.

Trude, S. (2006). Health plan pay-for-performance strategies. American Journal of Managed Care, 12, 537-542.

Vladeck, B. (2008). Pro & Con: Would pay for performance result in better care? Retrieved from:

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