Pay for Performance and Health Information Technology

By Compuquotes Team on March 27th, 2008

Health Insurance

Two relatively new concepts-Pay for Performance and Health Information Technology-may make substantial changes to the function and performance of healthcare management in America over the next decade or two.


Pay-for-performance (P4P) systems are designed to reward doctors, hospitals, and other healthcare professionals and providers for increased efficiency and work performance. In simple terms, this refers to healthcare providers that provide higher quality care for a lower financial cost. The federal government has made some initial efforts to implement P4P in Medicare programs; however there is as yet no information to suggest whether or not P4P will effectively reduce the costs of healthcare.

P4P is being considered as part of health reform measures that are intended to move away from emphasizing the importance of performing a large number of services and procedures. The current health system has been criticized because it provides healthcare workers with a strong incentive to increase the quantity, but not the quality, of the services they provide. Another criticism is that treating patients for chronic illnesses provides more financial reward than preventing patients from developing chronic illnesses.

P4P is intended to solve both problems by rewarding providers who focus on providing quality preventative care that improves general public health and minimizes wastage of resources. While it's not easy to speculate on the impact of P4P to the general public as the program is implemented, the eventual intention of a fully-implemented P4P system is that people are able to obtain better quality healthcare-particularly preventative healthcare-without incurring any extra expense.

Health Information Technology

Health Information Technology (Health IT) is the use of electronic methods of healthcare administration, recordkeeping, and storing and organizing of medical information. A comprehensive, nation-wide system of Health IT might be used to improve the quality and efficiency of healthcare by making it easier for doctors to access patient records and information.

This is a useful concept simply because many people have more than one doctor. For example, a female patient may see a general practitioner, a gynecologist, and other specialists such as an ear, nose, and throat doctor on a regular basis. With a Health IT system implemented, each doctor would be able to access complete medical records including treatment prescribed by other doctors. This would allow each doctor to ensure they do not prescribe medications that can react unfavorably with each other, and prevent duplicate treatments being administered.

In addition, accident or emergency victims may be able to access faster, better, safer treatment if a Health IT system allowed emergency medical personnel to access their medical records immediately. A nation-wide Health IT system would also benefit people who become sick while traveling, and may even make accessing health insurance easier. An effective IT system could even reduce the costs of medical care, as medical staff would spend less time on administrative tasks.

There are some drawbacks, however, including criticism of the fact that electronic records would be vulnerable to access from unauthorized persons (however, this may be an overstatement of the problem, simply because paper records can be accessed by unauthorized persons too). In addition, the projected costs of setting up such a system are enormous, with every doctor's office and hospital in the country potentially being required to upgrade their computer systems.

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