...February 2012 Pay for Performance What better way to drive people to work harder and more efficiently, you may ask, than to offer them a special carrot: more money for hitting specific company targets? The idea seems perfect. Studies have shown time and again that pay represents one of the most important factors involved in retaining qualified employees, it is little wonder that there has been a great deal of attention focused on how best to compensate employees for their performance in recent years. Moreover, because employee performance and productivity is inextricably related to organizational profitability, these issues have assumed new relevance and importance in the current economic environment. There have been some mixed reviews concerning pay-for-performance approaches to enhancing employee performance, though, that suggest there is more involved than simply throwing money at top performers. Despite these constraints, many authorities suggest that pay-for-performance programs have a lot to offer organizations seeking to identify better ways to improve employee performance. Pay for performance is not a new idea. Organizations all over the world use this type of system when offering bonuses based on predetermined results or commission. Pay-for-performance programs, also known as incentive pay or merit pay, are a solid approach to rewarding top-quality performance by employees in many types of organizations including healthcare settings. Pay for performance is a motivation...
Words: 1704 - Pages: 7
...Pay for Performance: It’s Effect on Employee Motivation Name Course Title Professor’s Name Date Pay for Performance: The Effect on Employee Motivation Managers are continuously looking for ways to motivate their employees. Many methods have been tried and many methods have failed. Consequentially, human resource professionals and managers continue to work to develop effective performance management systems which serve to motivate employees, with an end result of improved morale and increased productivity. Designing an effective performance management program, combined with the appropriate compensation methods, can serve as tools to inspire and motivate employees to improve and/or maintain the highest levels of performance. Compensation administrators are encouraging the use of pay-for-performance plans to meet this goal. Pay-for-performance plans motivate employees to be productive and perform at higher levels by linking their pay directly to their pay. The idea behind pay-for-performance plans is that money serves to motivate employees to perform. Maslow’s theory of motivation “suggests that employee needs are arranged in priority order such that lower-order needs must be satisfied before higher-order needs become motivating” (Leonard, 2010, p. 121) with the lowest level of needs being basic biological needs and the highest level being self-fulfillment. When an individual is on the lower levels of the spectrum and trying to fulfill his/her basic...
Words: 4107 - Pages: 17
...Pay for Performance Suley Cruz HCS/531 May 25, 2015 Sarah Dunn Pay for Performance Financing is a critical factor in health care delivery. The way health care is financed impacts it’s delivery. The continual increase of health care cost caused health care reform initiatives to control cost to focus on reimbursement models. Pay For Performance (P4P) is an increasingly popular initiative. The use of pay for performance has effects on the cost, quality, and efficiency of health care. This paper will discuss the effects the use of pay for performance has on patients, provider, and the evolution of health care delivery. Pay for Performance Pay for Performance plans were developed in the early 2000’s as a way to control costs. “Pay-for-Performance is a reimbursement plan that links payment to quality and efficiency as an incentive to improve the quality of health care and to reduce costs” (Shi & Singh, 2012, p. 586). Pay for performance is based on the belief that payment incentives will drive providers to deliver better care which will lead to disease prevention or early diagnosis. Pay for performance incentives give providers bonuses for meeting pre determined quality measures. The main quality measures used in P4P are patient experience, process, outcomes, and structure. Defining Pay for Performance Measures Patient experience refers to patients' assessment and satisfaction with the quality of care received, for example, wait time, communication and cleanliness...
Words: 1012 - Pages: 5
...Pay-for-performance Reimbursement and pay-for-performance are the heart and soul of every organization. Without money flow into the health care system, it is hard to pay for the services offered to individuals. Client has to pay for the health care services utilized in one way or other. Health care system is growing in a faster pace with than the economy in the United States. The various reasons are technology proliferation, new medications in business, research studies, advances in devices, and new procedures. On the other side, there is widespread concerns about the medical errors, inconsistent quality in health care services, increase in cost, and public awareness about the health care services through Medias, led to the movement of pay-for-performance. This emerged as a cost containment program. Health care system is trying to provide quality, efficiency, accountability, and transparency in health care services through the development of pay-for-performance movement (Henley, 2005). Pay-for-performance refers to the financial incentive program that pay a bonus to the participant of services such as physicians, hospitals, physician groups, or health plan groups who attain a benchmark in quality, efficiency, accountability in health care services and in patient care. This is referred as the pay-for-performance movement. This program provides high credit bonus for preventive care services. As the term indicates, "pay-for performance" is the high quality health care services...
Words: 1669 - Pages: 7
...Does “pay-to-performance” works in Western Societies? * Australian Research on Performance Pay for teachers identified that many examples of pay-for-performance schemes over the past 100 years or so, especially in the USA * As of 2005, 75% of all U.S. Companies connect at least part of an employee’s pay to measure of performance * President Bush’s US$ 500 million bill on Teacher Incentive Fund will provide a $5000 reward to approximately 100,000 teachers across the country * National Health Service of the United Kingdom introduced a pay-for-performance contract for family practitioners * Last but the last, United State Congress passed the Pay to Performance Act for 2009 to regulate the compensation scheme in the country ------------------------------------------------- Reason why “pay-to-performance” works in Western Societies? * Government is taking the lead – pay-for-performance can easily find in public sector service. E.g. health care, teaching * General public accepted Pay-to-Performance – more than 75% of US companies adopted this compensation scheme * Is benchmarking standard for a good company - One of the measurement criteria for “100 best companies to work for” * Pay-to-performance is being using in the education system, students know its benefit even they start to work. * Government enforcement : Pay to Performance Act for 2009. ------------ page 3 (3 mins) Pay-to-performance is a very common compensation...
Words: 560 - Pages: 3
...Reimbursement and Pay-for-Performance HCS/531 March 25, 2013 Reimbursement and Pay-for-Performance With health care reform taking full effect, various changes are emerging with regard to health care provider reimbursements. Third-party and government payers are rapidly moving toward pay-for-performance approaches that emphasize the quality rather than the quantity of health care services. Pay-for-performance initiatives have the capability of significantly impacting reimbursements based on whether or not and to what extent certain performance outcomes are met. At the same time, health care providers and consumers are both positively and negatively affected by pay-for-performance programs. While the future of pay-for-performance programs is unknown, it can be assumed that health care providers will likely carry increased pressures with regard to outcome responsibilities. With the continual addition of regulations set forth by the Centers for Medicare and Medicaid Services (CMS), demands to consistently provide high-quality care will increase. Pay-for-Performance Pay-for-performance is a payment model that rewards physicians, hospitals, medical groups, and other healthcare providers with financial incentives based on performance on select measures (Epstein, 2012). These performance measures can cover various aspects of health care delivery including: clinical quality and safety outcomes, efficiency, health care access and availability of care, patient experience and...
Words: 2082 - Pages: 9
...Reimbursement and Pay-for-Performance Tessa Zendner HCS/531 March 2nd, 2015 Georgetta Baptist Reimbursement and Pay-for-Performance Pay-for-performance programs have changed the way physicians provide care in many sectors of the health care industry. They impact reimbursement, especially in regard to Medicare and Medicaid. Pay-for-performance has effects on both the quality and efficiency of health care delivery, although its overall impact it a matter of debate. There are studies that show improvement in quality of care in some areas, and others that show no difference in outcomes. There may even be negative repercussions and ethical issues stemming from the enactment of these initiatives. The goal will be to revise and adapt the system within the evolving health care landscape in order to provide the best outcomes possible for both providers and consumers. Pay-for-performance Pay-for-performance is an incentive program defined by the Health Care Incentives Improvement Institute as, “a term that describes health-care payment systems that offer financial rewards to providers who achieve, improve, or exceed their performance on specified quality and cost measures, as well as other benchmarks” (Pay for Performance, 2012). Pay-for-performance has become a popular tool to attempt to improve quality and efficiency in health care. It is becoming more widespread with the enactment of The Patient...
Words: 1628 - Pages: 7
...PAY-FOR-PERFORMANCE: INCENTIVE REWARDS Compensation can be a significant source of motivation if at least part of it is tied directly to the employee's performance. Countless financial incentive systems have been developed over the years to motivate employees who occupy various levels within an organization and who perform different types of duties. Some of these systems have been successful, while others have not. The success of a particular system depends not so much on the formula for determining incentive payments, as on the existence of a favorable climate in which the system can operate. Success also depends on the degree to which the system has been tailored to the needs of the organization where it is to be used. Contributing to this success, furthermore, are the ways in which the system allows for employees to participate, psychologically as well as financially, in the organization. Employee stock ownership plans, can be advantageous to employers and to employees. Successful Incentive Plans: The success of an incentive pay plan depends on the organizational climate in which it must operate, employee confidence in it, and its suitability to employee and organizational needs. Importantly, employees must view their incentive pay as being equitable and related to their performance. Performance measures should be quantifiable, easily understood, and bear a demonstrated relationship to organizational performance. | Individual Incentive Plans Piecework plans...
Words: 402 - Pages: 2
...Performance-based Pay Employee benefits are incentives that businesses create in order to draw employees to the company and reward them for good performance. Some benefits are bonus plans that award employees that make the most sales or have the highest production rates. Others are stock option plans that allow employees to purchase company stock at a discount. Incentive schemes are one of the most popular and potentially effective forms of benefits available for employees, particularly those involved in the sales process. These schemes reward those who meet or exceed their targets, and provide a financial or non-financial incentive to encourage high productivity. The primary advantage to employee benefits is motivation. The best kinds of benefits are used to attract talented business leaders to the organization. These leaders then increase performance as whole with awards for increasing efficiency or creating new solutions for business issues, companies can also encourage creativity and change throughout the organization. Many of the advantages associated with introducing incentive schemes as benefits for sales employees are self-explanatory. In the first instance, once employees are drawing a salary there is frequently little reason for these individuals to work as hard as they could. While sales employees would expect to lose their jobs if they repeatedly failed to meet their targets, many employees coast through, fulfilling the minimum requirements but failing to meet their...
Words: 581 - Pages: 3
...Performance Related Pay (PRP) has been defined by several scholars including Armstrong (2002:261) and CIPD (2009). They suggested that PRP is a method of remuneration that provides individuals with financial rewards in the form of increases to basic pay or cash bonuses which are linked to an assessment of performance, usually in relation to agreed objectives. Performance related pay turn out to be extensively used in the public sector (for example, local government, the NHS and teachers), for which a government of both complexions have supported the idea. There are number of benefits of performance related pay that was identified by Armstrong (1999). He noted that performance related pay can be used to motivate individuals and consequently develop them and the organisational performance. It can persuade managers to examine the progression of objectives settings as part of their advance to supervising the department or branch. It helps the organisation to attract and retain people through financial rewards and competitive pay and reduces ‘golden handcuff' effects or poor performer staying with an employer and also meets a basic human need to be rewarded for achievement. Marchington and Wilkinson stated that, it is hard to find ultimate proof to determine the success of performance related pay. However, In recent years there has been an additional vigilant assessment of the ideas behind performance related pay. They are many studies that suggest that performance...
Words: 862 - Pages: 4
...Pay-for-performance and Reimbursement Jason Teker HCS/531 May 2, 2016 Georgetta Baptist Pay-for-performance and Reimbursement Health care is in the middle of a change in how payment is received for services provided. Fee-for-service is the dominant form of reimbursement for hospitals and doctors. According to Medicaid’s website, the fee-for-service payment model is structured so that there are incentives in place based on the number of services provided. Fee-for-Service models allow for a system where quantity is more important than quality. With rising health care costs, the federal government is looking to change the way hospitals and doctors are reimbursed for their services. Quality health care is becoming a hot topic in many realms of the health care industry. The government has proposed a new form of repayment in a system called Pay-for-performance which was brought to the forefront of policy agendas by the Institute of Medicine’s (IOM) report in 2000 titled To Err is Human (Mayes, 2006). In the report, the IOM estimated “as many as 98,000 patients die annually in U.S. hospitals due to preventable medical errors” (Mayes, 2006, p.17). Pay-for-performance is “a reimbursement method under which some physicians and hospitals are paid more than others for the same services because they have been deemed to deliver better quality care and their patients appear to have better outcomes” (Mayes, 2006, p.17). With this new reimbursement method, the incentives are now...
Words: 1832 - Pages: 8
...As our text states performance based pay should fit within the organizations external and internal environments. The “two external environmental components that have had a substantial effect on performance based pay are technology and laws and regulations” (Jackson, Schuler, & Werner, 2012, p. 402). Today, technology is helping to make performance management more accurate and laws and regulations can influence performance based pay as they help “change the cost of incentives to employers and the value of incentives to the employee” (Jackson, Schuler, & Werner, 2012, p. 429). In addition to this, performance based pay not only reduces labor costs but it helps attract, retain, and motivate employees. There can be many challenges with performance based pay. Two disadvantages of merit pay are measurement problems (how actual performance is measured) and the cost to the organization in giving merit raises instead of lump sum payments. A bonus program can also be costly and at times structured in a way that employees do not view it as fair. In my company we all receive a holiday bonus. The amount is determined not only by work performance but by seniority. In my experience this tends to create an issue of fairness amongst employees and can be a challenge. For example: there can be an employee who has been with the organization for years but puts in less work then an employee who may have been with us for 3 years and puts in more work. Employees don’t love that bonuses are...
Words: 479 - Pages: 2
...Reimbursement and Pay-for- Performance Edward G. Walker HCS531 May 26, 2014 Tracey Lane Reimbursement and Pay-for- Performance This paper will define Pay-for- Performance; I will explain how reimbursement is affected by Pay-for- Performance approach. I will discuss how system cost reductions impact the quality and efficiency of healthcare. I will discuss how Pay-for- Performance, effects healthcare providers and their customers. I will discuss the effects of Pay-for- Performance and the effect it will have on the future of healthcare. First we must understand what reimbursement and pay performance is. Pay-for-performance is referred to as an umbrella term with performance initiatives that are designed to improve efficiency, quality of the health care system. Pay-for-performance is a reimbursement plan that links payment to quality and effectiveness as an initiative to improve the quality of healthcare and reduce costs. Reimbursement is what the insurance company will pay to the provider and the reimbursement may be only a partial amount of what the actual charges. (Health Affairs, 2012) How is reimbursement affected by the pay for performance approach? This reimbursement method is a where some providers and hospitals pay better than other healthcare facilities for the same service. Their patients appear to have better health outcome results. The two main objectives are; (1) To increase the overall quality of health care that a patient receives. (2) To encourage...
Words: 1579 - Pages: 7
...Reimbursement and Pay for Performance Kristi Thomas Health Care Organizations and Delivery Systems HCS/531 August 11, 2014 Nita Magee-Cornelius Pay for performance is a slogan that is used lightly in 2014. It seems to be a no-brainer, when we pay for services we pay for quality and not quantity. It is a bit more complex than that. The slogan actually is a reimbursement or initiative program that provides financial incentives to hospitals, physicians, and other health care providers to make improvements to and achieve optimal outcomes for their patients. The outcomes are measure and some health care providers are paid more because they are deemed to have delivered better service or their patients appear to have better outcomes. There is a controversy amongst intellectuals that ask the question “How can the quality of care be measured?” The idea behind pay for performance is simple; we will give providers more money to achieve a goal. This paper will discuss how reimbursement is affected by this pay for performance initiative, how system cost reductions can impact the quality of care, how pay for performance can affect the provider and what type of effect it will have on the future. In the following paragraphs it will be discussed whether or not reimbursement is affected, how the system costs reductions impact the quality and efficiency of health care, how pay for performance affects the health care provider and their customers and the effects that the pay for performance phenomenon...
Words: 1523 - Pages: 7
...Reimbursement and Pay-for-Performance Darrick Poole HCS/531: Health Care Organizations and Delivery Systems February 11, 2013 Eugene Burwell Reimbursement and Pay-for-Performance In 2010, health care expenditures in the United States almost reached $2.6 trillion. This was 10 times more than expenditures spent in 1980. The rate of increase slowed in the late 1990s and early 2000s but industry experts still expect the cost of health care to increase more than the national income for some time to come. Stakeholders agree this continual financial burden is of critical importance. During the last decade, the financial woes in the United States caused many people to lose employment and others to work for much lower wages. The effects of the financial conditions increased the focus on health care spending and peoples’ ability to afford health care. The premiums paid by employees for their families increased by 97% putting further strains on employers and their workers. Baby boomers reaching retirement age increased enrollment in Medicare and Medicaid causing strain on federal and state government budgets. In 2010, health care expenditures consisted of 17.9% of the Gross Domestic Product. Over half of the nation’s health care expenditures result from hospital care, physician, and clinical services. One way the Affordable Care Act seeks to address the issues of cost is by reducing the compensation for hospital and treatment services that result in medical errors or inadequate quality...
Words: 2084 - Pages: 9
