Pay for Performance Healthcare Delivery System

The U.S. healthcare system is unique as it does not have a uniform health system and no universal health coverage thus costly to many citizens. Health care delivery systems aim at universal access to health care services and implementing cost-effective services that meet pre-established standards of quality. The change in delivery and finance methods of health care from fee for service to pay for performance has improved the quality of patient care and health outcomes.  Fee-for-service reimbursement was based on the number of patients treated while performance pay refers to a health care system where providers are reimbursed by payers by assessing treatment on a value-based model. Hospitals are rewarded for quality performance while penalized for subpar performance. The hospital receives compensation for providing quality patient results rather than the number of services provided, thus reducing costs. This payment approach’s primary objective is to enhance the quality, efficiency, and value of health care. Pay for performance is designated to improve health care by improving results and lowering costs.

To improve patient outcomes, hospitals are leaning on nurses’ critical roles in determining patient overall health. The Center for Medicare and Medicaid Services (CMS), the largest funder of healthcare in the U.S. has proposed to stop payments to hospitals for hospital-acquired conditions such as urinary tract infection to engage hospitals to improve patient care. Hospitals are thus implementing policies to have minimum staffing levels for nurses in hospitals to improve patient health and safety therefore improving productivity and lowering costs.

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Efficient nurse-patient ratios reduce the length of stay and hospital readmissions due to improved quality of care, ultimately reducing hospitals’ costs. There is improved patient safety as the quality of patient care increases as the number of patients in nurse care decreases, thus reducing mortality rates (Grabowski, Stevenson, Caudry, O’Malley, Green, Doherty, and Frank, 2017). The improvement of patient care is directly proportional to the pay for performance incentive. The effect of the reform is higher reimbursements due to an increase in patient care and an increase in administrative costs due to the hiring of more nurses. There is also improved patient care that translates to improved quality of life.




Grabowski, D. C., Stevenson, D. G., Caudry, D. J., O’Malley, A. J., Green, L. H., Doherty, J. A., & Frank, R. G. (2017). The impact of nursing home pay‐for‐performance on quality and medicare spending: results from the nursing home value‐based purchasing demonstration. Health services research, 52(4), 1387-1408.





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