Pay for Performance: Are Hospitals Becoming More Efficient in Improving Their Patient Experience?/PRACTITIONER APPLICATION

By Stanowski, Anthony Charles; Simpson, Kit et al. | Journal of Healthcare Management, July/August 2015 | Go to article overview

Pay for Performance: Are Hospitals Becoming More Efficient in Improving Their Patient Experience?/PRACTITIONER APPLICATION


Stanowski, Anthony Charles, Simpson, Kit, White, Andrea, Lynch, Jack, Journal of Healthcare Management


Anthony Charles Stanowski, DHA, FACHE, vice president, Applied Medical Software, Collingswood, New Jersey; Kit Simpson, DrPH, professor, Department of Health Science and Research, College of Health Professions, Medical University of South Carolina, Charleston; and Andrea White, PhD, professor emerita, Department of Healthcare Leadership and Management, College of Health ITofessions, Medical University of South Carolina

EXECUTIVE SUMMARY

The Centers for Medicare & Medicaid Services (CMS) changed the way hospitals interact with patients when it implemented a pay-for-performance (P4P) system. Under this system, a financial reward or penalty is based in part on measures of patient experience. The program seeks to reward healthcare providers who expand their focus from solely delivering a highly technical set of services that improves the patient's health to creating an atmosphere that makes hospitalization more humane and respectful of patients' values and preferences. Refocusing priorities requires capital investment in more "patient-friendly" facilities or funding staff training programs.

This study seeks to determine whether a relationship exists between inpatient costs and the score for "overall rating of hospital" (ORH) on the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) hospital version survey. Second, if a relationship exists, the study examines how that relationship changed during the time of CMS' implementation of its P4P program.

The study's findings suggest that higher-cost hospitals have higher levels of positive patient experiences, after controlling for other variables. Importantly, the research findings indicate that hospitals are becoming more efficient in delivering care associated with higher levels of patient experience, coinciding with implementation of the P4P program.

For more information about the concepts in this article, contact Dr. Stanowski at astanowski@comcast.net

INTRODUCTION

Globally, public and private payers seek to improve healthcare quality and lower costs through value-based purchasing (VBP) programs, specifically pay for performance (P4P) (Addink, Bankart, Murtagh, & Baker, 2011; Sakai, 2012; Boucher, 2012; Pearson, 2012). Beginning in federal fiscal year (FY) 2013, the Hospital Value-Based Purchasing Program applied to payments for discharges occurring on or after October 1, 2012. The P4P program included most short-term general nonfederal (STGNF) facilities. The funding is budget neutral, as payouts are funded by penalties (CMS, 2012b).

Since October 1, 2012, hospitals have been rewarded or penalized on the basis of a "total performance score" (TPS) blended from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey and process-of-care measures. In FY 2014, 1,451 hospitals were penalized (McKinney, 2013), and in FY 2015, 1,375 were penalized (Rice, McKinney, & Evans, 2014) for failing to meet goals. Seventy-four percent of healthcare leaders reported that they will focus on patient experience and education over the next 3 years, and 30% expect to increase their spending on professional trainers or training materials (Zeis, 2013). For FY 2013, the P4P initiative imposed an incentive or penalty of up to 1%; this was to increase by 25 basis points each year until it reached 2% by FY 2017 (CMS, 2012b). The TPS incorporated an outcome domain in FY 2014 and an efficiency measure in FY 2015.

As expected, hospitals' experience with performance measures corresponds with their ability to succeed. The oldest TPS measures that examine processes of care have improved significantly since 2002 (The Joint Commission, 2012). Because of a relatively briefer history with HCAHPS and the increased complexity in changing employee attitudes toward patient service, hospitals experience greater variability in patient experience scores (The Joint Commission, 2012). Haywood (2012) reported that because of larger variation in HCAHPS scores, hospitals that experience improvement in their HCAHPS performance are more likely to raise their TPS and receive increased incentive payments. …

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