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Publication Briefs

Systematic Review: Effects of Pay-for-Performance on Healthcare

Pay-for-performance (P4P) programs provide financial rewards or penalties to individual healthcare providers, groups of providers, or institutions according to their performance on measures of quality. In theory, P4P programs should help drive the behavior of providers and healthcare systems to improve quality of care, reduce unnecessary use of expensive services, and improve patient outcomes. This review updates and expands on a prior systematic review in order to summarize current understanding of the effects of P4P programs on process of care and patient outcomes in ambulatory and outpatient settings in and outside the United States. Investigators searched databases (e.g., PubMed, MEDLINE, CINAHL) from June 2007 to February 2016, analyzing 69 studies that evaluated the effectiveness of financial incentives to improve processes of care and patient outcomes.


  • Overall, in the ambulatory setting there was low-strength evidence that P4P programs might improve process of care outcomes over the short term (2 to 3 years), but there were limited data on longer-term effects. Many of the studies reporting positive findings were conducted in the United Kingdom (where incentives are much larger than P4P programs in the U.S.), and the largest improvements were seen in areas where baseline performance was poor.
  • There was low-strength evidence that P4P had little to no impact on intermediate health outcomes (e.g., changes in lab measures), though there were inconsistencies among study results. In addition, the evidence examining patient health outcomes was insufficient because few methodologically rigorous studies reported these outcomes.
  • In the hospital setting, there was low strength evidence that P4P had a neutral effect on patient health outcomes and a positive effect on reducing hospital readmissions.


  • Findings complement and add to prior reviews that have also generally found that P4P programs have not been consistently effective in improving patient outcomes. In addition, there is low-strength, contradictory evidence that these programs could improve processes of care. Thus, in the absence of strong evidence of benefit, the authors suggest that it may be particularly important to consider the potential harms and costs associated with P4P.


  • The evidence is limited by methodologic flaws, variation in program and population characteristics, and limited reporting on secular trends in health care.
  • There are limitations in applying findings from other countries broadly in the U.S.

This review was funded by VA HSR&D's Quality Enhancement Research Initiative (QUERI) Evidence-based Synthesis Program (ESP). Dr. Kansagara is part of HSR&D's Center to Improve Veteran Involvement in Care (CIVIC), Portland, OR.

PubMed Logo Mendelson A, Kondo K, Damberg C, et al, and Kansagara D. The Effects of Pay-for-Performance Programs on Health, Health Care Use, and Processes of Care: A Systematic Review. Annals of Internal Medicine. March 7, 2017;166(5):341-53.

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HSR requires notification by HSR-funded investigators about all articles accepted for publication. These journal articles are reviewed by HSR and publication briefs or summaries are written for a select number of articles that are then forwarded to VHA Central Office leadership to keep them informed about important findings or information. Articles to be summarized are selected by HSR based on timeliness of the findings, interest of leadership, or potential impact on the organization. Publication briefs are written for only a small number of HSR published articles. Visit the HSR citations database for a complete listing of HSR articles and presentations.

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