Information on the impact of pay-for-performance programs is lacking in the nursing home setting. This literature review (1980-2007) identified 13 prior examples of pay-for-performance programs in the nursing home setting: 7 programs were active as of 2007, while 6 had been terminated. The programs were mostly short-lived, varied considerably in the choice of performance measures and pay incent...

Any time money changes hands in health care, perverse consequences can result. This fact of financial life applies to the entire spectrum of payment options, including the 2 methodologies that define its extremes: fee for service potentially rewards clinicians for doing more than patients need, whereas capitation potentially rewards them for doing less. Pay for performance is an intermediate pa...

Many medicines work for fewer than 50 percent of the patients who take them,1 but the pharmaceutical companies that manufacture them nevertheless get paid for every prescription filled. This model is about to change dramatically. We believe that in the future—driven by powerful demographic, sociological, and technology forces—many medicines will be reimbursed on the basis of the performance the...

Design and Implementation of Pay for Performance A large, mature and robust economic literature on pay for performance now exists, which provides a useful framework for thinking about pay for performance systems. I use the lessons of the literature to discuss how to design and implement pay for performance in practice. JEL Classification: M52, J33, M12, L81

We construct statistical models to assess whether hospital size will impact the ability to identify "true" hospital ranks in pay-for-performance (P4P) programs. We use Bayesian hierarchical models to estimate the uncertainty associated with the ranking of hospitals by their raw composite score values for three medical conditions: acute myocardial infarction (AMI), heart failure (HF), and commun...

PFP is an incentive scheme in which employees receive extra, performancedependent compensation for their work if they reach certain performance targets. The most common form of PFP incentive awards are cash bonuses. Nearly all firms above minimal size provide some form of PFP to some employees, at least to management level and above. But PFP schemes are also provided at nonmanagement levels and...

Previous research has argued that compensation plans based on the pay-forperformance principle are effective in inducing higher levels of effort and in avoiding diversion of funds by managers. How should managerial compensation be structured if the problem is to induce managers to pursue more innovative business strategies? In a controlled laboratory experiment, we provide evidence that the com...

In an ideal world, pharmaceuticals would serve the purpose of improving health. By offering to reward firms on the basis of their contribution to this purpose, the Health Impact Fund would stimulate innovation without impeding access through high prices. It would focus the attention of pharmaceutical innovators on the most cost-effective ways of improving global health through new medicines. Th...