Paying for improvements in quality: recent experience in the NHS in England

There is a long-term international trend towards linking payments more closely to providers’ performance. The US and England have been at the forefront of the design and introduction of such pay-for-performance (P4P) schemes. England’s experience is, however, likely to have greater salience for the Nordic countries’ health care systems due to the publicly funded finance structure. We review the development of five of England’s major schemes and summarise the available evidence on their impacts. These schemes are: the Quality and Outcomes Framework (QOF); Advancing Quality; the Commissioning for Quality and Innovation (CQUIN) framework; Best Practice Tariffs; and the newest ‘non-payment’ policies. Much of the evidence is limited by the non-experimental way in which the schemes have been introduced, with limited data available prior to the introduction of the schemes and no experimentally unexposed providers to serve as controls. Nonetheless, the existing evidence suggests that P4P can result in modest short-term improvements in the incentivised aspects of performance. There is little evidence of effort diversion, yet some to suggest positive spillovers of these schemes onto non-incentivised aspects of performance. While there is some evidence of gaming and inequitable consequences, these do not appear to be widespread. The gains that can accrue across large patient populations as a result of relatively small financial incentives mean that P4P schemes can be cost-effective. P4P programmes are likely to be most effective when introduced as a supporting part to a wider quality improvement initiative, and when results are published to encourage a reputational as well as a financial incentive for improvement. Though the accumulation of evidence to support P4P has not been systematic or especially robust, it remains a popular policy tool with decision-makers in England, with its reach set to increase further in the future.