The Effect of Financial Incentives on Hospitals That Serve Poor Patients

Background: Providing financial incentives to hospitals to improve quality is increasingly common, yet its effect on hospitals that care for poor patients is largely unknown. Objective: To determine how financial incentives for quality performance affect hospitals with more poor patients compared with those with fewer poor patients. Design: Retrospective study. Setting: U. S. hospitals. Participants: 251 hospitals that participated in the Premier Hospital Quality Incentive Demonstration program and a national sample of 3017 hospitals. Measurements: The association between the disproportionate-share index, a marker of caring for poor patients, and baseline quality performance, changes in performance, and terminal performance for acute myocardial infarction, congestive heart failure, and pneumonia for hospitals in the pay-for-performance program and those in the national sample (which did not receive financial incentives). Results: Among both pay-for-performance hospitals and those in the national sample, hospitals with more poor patients had lower baseline performance than did those with fewer poor patients. A high disproportionate-share index was associated with greater improvements in performance for acute myocardial infarction and pneumonia but not for congestive heart failure, and the gains were greater among hospitals that received financial incentives than among the national sample. After 3 years, hospitals that had more poor patients and received financial incentives caught up for all 3 conditions, whereas those with more poor patients among the national sample continued to lag. Limitation: Hospitals in the Premier Hospital Quality Incentive Demonstration may be atypical, and these results may not be generalizable to all hospitals. Conclusion: No evidence indicated that financial incentives widened the gap in performance between hospitals that serve poor patients and other hospitals. Pay-for-performance programs may be a promising quality improvement strategy for hospitals that serve poor patients.