A JAMA study reveals that P4P doesn’t improve outcomes:

Researchers looked at information from hospitals treating 105,383 patients over three years beginning in 2003. They evaluated such factors as whether the hospitals prescribed aspirin and widely accepted cardiac drugs called beta-blockers and ACE inhibitors, and whether patients were counseled to quit smoking.

Compliance rose to 94.2% from 87% at the pay-for-performance hospitals. At the others, compliance also rose, to 93.6% from 88%. Researchers found a “slightly higher rate of improvement for 2 of 6 targeted therapies” but concluded that “overall, there was no evidence that improvements in in-hospital mortality were incrementally greater at pay-for-performance sites.”

One reason? The “pay” part has to be significantly worthwhile – and often times it’s not:

“One read on this is that the carrots have to be bigger,” Duke’s Dr. Peterson said. Hospital officials involved in the Medicare pilot project said this winter in a conference call with reporters that financial incentives were small relative to their budgets.

Medicare, are you listening?