Researching the the Pay-for-Performance Model

Subject: Employee Management
Pages: 2
Words: 636
Reading time:
3 min
Study level: Master

The health financing model “performance-based remuneration” or Pay-for-Performance represents a relatively new system of remuneration for doctors or financing of medical organizations depending on their efficiency. The main idea lies in the presence of direct or indirect stimuli, which are achieved by funding based on the results of assessing the effectiveness and quality of medical activities. Essentially, the theory underlying the Pay-for-Performance model is purely economic – high-quality medical activities should be provided using minimal costs. From these facts, the main problems of the model follow.

First, there is a weak evidence base for effectiveness in improving the provision of medical care or health indicators. The program does not take into account overall health problems that might exist in the population, instead drawing on the specific results based on a specific patient. There are many outcome possibilities for every patient, which causes a lot of confusion for healthcare providers as they try to evaluate workers’ performance based on them. However, Vlaanderen et al. (2018) conclude that “an increased focus on outcome indicators alone is unlikely to result in an increased effectiveness of payment models” (p. 229). Moreover, there is also the issue of false documentation that some healthcare workers use to prove their results – the program relies heavily on tangible evidence of one’s performance. Therefore, the effectiveness of the system cannot be proved in a certain way.

From there, another demerit of Pay-for-Performance is principle rises. This one lies in the complexity that comes with the need to track workers’ efficiency. There are considerable gaps in the knowledge of how exactly healthcare should be measured and which indicators should be used for the evaluation of a worker’s performance. Although the system is widely used, there is still no unified evaluation guide that would work for at least the majority of cases.

The third disadvantage the Pay-for-Performance principle presents is the possibility of healthcare professionals changing their work approaches in order to perform better. At first, it could seem like an improvement, but the underlying issue can cause quite disastrous consequences. The doctors might become disinterested in caring for the patients with acute or chronic illnesses due to the higher risk of poor outcomes, instead taking on the ones with more curable health problems. This could potentially lead to reputation problems for healthcare providers, as well as the dissatisfaction of patients.

Lastly, the fourth drawback of this payment system is the difficulties it creates for both the doctors and the healthcare providers when faced with cause-and-effect relationships. If a patient has hidden health issues that were not assessed at their first visits to the doctor, it might become impossible to differentiate between the symptoms. There will be ones that belong to the underlying issue and the ones that the patient had described as his major discomfort. Seeing as the Pay-For-Performance principle strives to avoid the patient’s comeback, there is a high rate of unpredictability in the development of the illness.

Despite this, a number of countries are still introducing healthcare programs based on the Pay-for-Performance model and taking full advantage of it. Zaresani and Scott (2021) state that “many governments and insurers use P4P schemes as a policy lever to change healthcare providers’ behavior to improve value for money in healthcare and make providers accountable” (p.1). Most healthcare providers see the Pay-for-Performance model as a tool for defining the structural elements of the function of a healthcare organization and collecting data worthy of attention. After all, the model creates awareness of the importance of a correct strategy for the procurement of medical services. In addition, it also secures this strategy’s relationship with the goals of a medical organization in particular and the country’s health in general. Overall, the Pay-for-Performance system is considered one of the most effective payment models today, especially when paired with other principles.


Vlaanderen, F. P., Tanke, M. A., Bloem, B. R., Faber, M. J., Eijkenaar, F., Schut, F. T., & Jeurissen, P. P. (2018). Design and effects of outcome-based payment models in healthcare: a systematic review. The European Journal of Health Economics, 20(2), 217–232. Web.

Zaresani, A., & Scott, A. (2021). Is the evidence on the effectiveness of pay-for-performance schemes in healthcare changing? Evidence from a meta-regression analysis. BMC Health Services Research, 21(1), 1–10. Web.