Pay for Performance for Salaried Health Care Providers: Methodology, Challenges, and Pitfalls

Pay for performance has been recommended by the Institute of Medicine as an incentive to improve the quality of health care. Traditional quality-improvement methods may be adapted to evaluate performance of salaried providers, but it is important to separate provider contributions from other influencing factors within the health care system. Accurate recording, extraction, and analysis of data together with careful selection and measurement of indicators of performance are crucial for meaningful assessment. If appropriate methodology is not used, much time, effort, and money may be expended gathering data that may be potentially misleading or even useless, with the possibility that good performance may go unrecognized and mediocre performance rewarded.