The Potential Role of Pay-for-Performance in Irish Health Care

The current recession dictates that large decreases in public expenditure are required. As the second largest component of public expenditure, health is particularly vulnerable to the effects of the further cuts in expenditure that are required over the period 2012-2014. In the context of diminishing financial resources, there is increasing emphasis on maximising the value of expenditure by achieving efficient delivery of high-quality health-care services. In addition, the Irish health system is characterised by a complex set of financial incentives which have important implications for efficiency and equity. This paper examines international evidence on pay for performance (P4P) schemes to inform policymakers on the potential for implementing P4P in the Irish health-care system. In P4P, payments are tied to performance. P4P is becoming increasingly common in international health-care systems despite the lack of evidence on its effectiveness and a lack of consensus on how to design and implement such programmes. It is therefore important to understand the implications of existing P4P programmes before recommending their introduction in the Irish context. We provide an overview of the literature relating to large-scale P4P schemes, focusing on programmes that have been instituted by national public sector organisations. The literature highlights the poor quality of evidence on P4P schemes, stemming partly from technical challenges inherent in evaluating P4P schemes. Notwithstanding these technical difficulties, the available evidence does not provide a clear answer to the question of whether P4P should be implemented. Limitations include difficulties in obtaining valid performance indicators, unintended consequences, and the absence of evidence on cost effectiveness of P4P schemes. We assess how a P4P scheme would interact with the payment structures already in place in the Irish health-care system. We conclude that while there is an obvious need for greater efficiency and quality in the system, there are reasons why P4P initiatives are not recommended at this stage at least until the many complexities in provider reimbursement, public/private interaction, and patient access to the system are resolved.