Pay for Performance: Are Hospitals Becoming More Efficient in Improving Their Patient Experience?

The Centers for Medicare & Medicaid Services (CMS) changed the way hospitals interact with patients when it implemented a pay-for-performance (P4P) system. Under this system, a financial reward or penalty is based in part on measures of patient experience. The program seeks to reward healthcare providers who expand their focus from solely delivering a highly technical set of services that improves the patient's health to creating an atmosphere that makes hospitalization more humane and respectful of patients' values and preferences. Refocusing priorities requires capital investment in more "patient-friendly" facilities or funding staff training programs. This study seeks to determine whether a relationship exists between inpatient costs and the score for "overall rating of hospital" (ORH) on the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) hospital version survey. Second, if a relationship exists, the study examines how that relationship changed during the time of CMS' implementation of its P4P program. The study's findings suggest that higher-cost hospitals have higher levels of positive patient experiences, after controlling for other variables. Importantly, the research findings indicate that hospitals are becoming more efficient in delivering care associated with higher levels of patient experience, coinciding with implementation of the P4P program.