Performance-Based Payroll Programs Can Improve Quality of Care and Reduce Mortality

Nursing homes and hospitals around the world have long operated on experience-based pay scales. Only recently, however, have various hospitals begun adopting performance-based payroll systems to improve the quality of care. The results are especially crucial for American health providers, who will move towards pay for performance in 2013 when it is officially introduced by Medicare. Although opposition to pay for performance has cited that little evidence exists connecting performance-based incentives to patient wellbeing, a more recent report published by the New England Journal Medicine (NEJM) reveals a strong correlation between pay for performance programs and reduced mortality rates. These findings pave the way for further research into better incentives for health care providers.

A common denominator among deaths in hospitals and nursing homes is understaffing. Most injuries and deaths are preventable through competent and sufficient caretakers. Understaffing refers not only to a lack of qualified staff available but also to the amount and quality of care and lack of effective staff. It is crucial that healthcare workers provide optimal attention to all patients and follow all policies and procedures to uphold a high standard of care.

In 2008, the National Health Service introduced Advancing Quality, a pay for performance program, to northwestern English hospitals. Based on the Hospital Quality Incentive Demonstration program in the US, Advancing Quality was designed to promote better quality of care by rewarding good performance with additional pay. The system was organized in a “tournament” format, providing bonus payments to only the top performers according to a set of standards. Poor performers were not penalized. Altogether, $7.5 million dollars were awarded in the first 18 months.

The NEJM study focused on comparing hospitals under Advancing Quality to hospitals that had not yet adopted the program. It scrutinized the 18 months prior to and 18 months following the introduction of Advancing Quality, analyzing mortality rates due to acute myocardial infarction, pneumonia, and heart failure. Taking into account chances of death due to patient history, age, sex, and stage of ailment at the time of hospital admittance, the study compiled data on over a million patients. This was charted next to the hospitals’ Advanced Quality rankings, or lack of one. In this way, they tested the effect of incentives on mortality rates.

The results demonstrated that risk-adjusted mortality rates for the three conditions decreased significantly with the introduction of the pay for performance program. With an overall 1.3% decrease in mortality rates, this was equal to 890 fewer deaths out of 70, 644 patients over an 18 month period. This is an especially positive outcome as opposed to the other hospitals, which had little to no change in mortality rates before and after the introduction of Advancing Quality.
The introduction of performance-based pay systems in the world of healthcare is a tremendous step towards improving the quality of care provided. A lower mortality rate is a definite sign of better treatment and standards, achievable through financial incentives, as demonstrated by this study. Understaffed facilities suffer from carelessness and neglect, often due to a lack of vigilance on the workers’ parts. Quality of care is the top priority at nursing homes, and can only be achieved through motivated staff. Burnout occurs when staff members feel overworked and disconnected from their jobs, which often leads to reduced attention to care. Financial bonuses provide incentive for adhering to high standard of care in nursing homes.

It is important to note, however, that providing pay incentives may also have negative consequences, and we often find that nursing homes will place profits over people. For example, an administrator may receive a bonus if he or she works within a certain budget, and of course, the easiest way to stay within budget is to shortstaff. That being said, this report by the NEJM, if nothing else, serves to reinforce that fact that many injuries that occur in health care facilities are preventable – the real underlying problem is that caregivers are just unmotivated or do not have the time to make the effort to take these preventative measures.


When a standard of care is not enforced, victims of neglect often sustain injuries that lead to death. Nurses at understaffed nursing homes often rush through caretaking procedures to save time and engage in practices that are harmful to patients. If your loved one suffered injuries that have led to death, it may have been caused by nursing home neglect or understaffing. Please contact us because you might have a Wrongful Death claim. One day, incentives may not be necessary to ensure a high quality of care in nursing homes but, until then, we are dedicated to aggressively protecting the rights of you and your loved one.