It is one of the basic questions in health policy in recent years. Quality can be measured in two parts. First of all, is quality improvement for targeted patients? Second, quality improves for non-targeted patients.
The first question is relatively clear. Someone feels that quality will improve for patients targeted by the payment-demonstration (P4P) program, but this may not always be a case. For example, financial incentives may not be sufficient to improve quality. Or the provider encouraged by the P4P program may not have significant impact on the results (eg, the patient may also affect the result of interest).
The second question is more complex. If the P4P programs try to encourage quality for targeted patients, quality can benefit or damage non-targeted patients. If the investment in the initiative to improve quality benefits targeted and non-targeted patients, the P4P programs can also benefit non-targeted patients. However, if physicians and other health care providers remove efforts from non-targeted patients to targeted patients, the quality of care for non-targeted patients may fall under P4P. Seminal work from Holmstrome and Millgrome (1991) showed that replacement of attempt away from non-educated works is well documented not only in healthcare but also in other industries.
A new paper by Brittteon et al. (2025) Describes Advanced Quality (AQ) initiative implemented in the United Kingdom:
Advanceing Quality (AQ) Scheme was a pay-for-demonstration plan introduced in the northwest region of England in October 2008 … All 24 eligible hospital trusts in the area voluntarily participated in the scheme. The scheme was an English adaptation of the US Premier Hospital Quality Incentive Demand (HQID) Scheme (Jha et al. 2012). It initially rewarded hospitals based on the quality of three emergency situations (acute myocardial infarction, heart failure, pneumonia) or the quality of care provided to patients admitted to one of the patients, which passed through one of the three alternative procedures (coronary artery bypass grafts, hip replacement and knee replacement).
During this time, hospitals scoring in the highest or second highest fourth received 4% or 2% bonus payment at the top of the amount reimbursed in the hospital for affiliated activity under national activity-based financing tariffs.
Therefore, covering our two questions above, Brittteon and Co-Eduthers check whether the quality improves quality for these 6 conditions (i) and (ii) for other patients outside these 6 conditions. Writers use data from the statistics (HES) of hospital episodes associated with mortality data from the UK Office of National Statistics (ONS). The main result of interest was 30-day mortality. An inter-intrusion approach was used to evaluate the impact of the AQ program where hospitals (where the AQ program was introduced) in the rest of the country was compared to hospitals in the rest of the country. Using this approach, the authors found that:
… Regional payment changes were associated with an increase in the mortality rate of 0.321 per cent marks (SE 0.114) for non-targeted emergency patients, which had no risk for encouragement compared to control areas by physicians. In contrast, the mortality rate for non-targeted patients decreased by 0.008 per cent marks (SE 0.002), which has been treated by their physician per quarter. These conclusions consistent with a series of sensitivity analysis. Conclusions suggest that the providers removed resources from non-targeted patients, but patients benefited from doctors learning from encouragement.
… The results suggest that an incentive in the AQ scheme had a small adverse spillover effect on the mortality for non-targeted patients treated at the hospital. The horrors of this estimated spillover effect saw improvement in mortality for patients with pre -targeted conditions … but 95% was statistically insignificant at the level of confidence.
You can read full paper Here,
