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Financial incentives not improving quality in hospitals

Written by Diane Archer

Since October 2012, the federal government has been using financial incentives to reward or penalize hospitals based on the quality of their care. A recent GAO report reveals that these financial incentives are not improving quality in hospitals yet.

It’s not evident that the financial incentives are significant enough to drive hospital behavior. The typical amount of the hospital financial bonus or penalty is quite small, less than one half of one percent of hospital income. And, a large number of hospitals have been focusing more on quality since long before the new government program went into effect.

So, it’s not surprising that the GAO did not yet see meaningful quality improvements from this new initiative. Among other things. mortality rates have not decreased and patient satisfaction has not increased in the three years studied. Hospital readmission rates have dropped, but a separate government initiative with financial incentives may be responsible for that drop.

GAO said that new improvements could come in the future.

The Centers for Medicare and Medicaid Services believes that this is a long-term initiative. And, there are more changes to the incentive program in the works.  Time will tell whether the added incentives for the hospitals to improve quality will deliver long-term results.

To learn more about how hospital quality incentives may drive up costs for people with Medicare, click here. And, if you’re planning for a hospital stay, be aware that all surgeons are not created equal. To learn more about how to find a hospital that provides good care, talk to your doctor, family and friends and check out the Informed Patient Institute web site, which has information and ranking on different hospital report cards. And, click here to find out why you should choose a hospital emergency room carefully.


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