Performance-Based Contracts in the Healthcare Industry (Essay Sample)

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Performance-Based Contracts in the Healthcare Industry
Performance based-contracting refers to a form of contracting that has clear indicators and objectives. More so, it has a systematic means of gathering data on the progress of the indicators with the goal of rewarding or sanctioning contractors based on performance. In the healthcare industry, services such as hospital management and HIV prevention are among the commonly contracted services. Nonetheless, despite its popularity, this contracting has many disadvantages because it seeks to benefit the contractor and the purchaser, but patients never enjoy high-quality health services. This paper will expound on the various reasons why performance-based incentives should not be implemented in the healthcare industry.
According to Thomas (2) and Shen (3), one of the reasons why a performance-based contracting is not a suitable approach to healthcare service provision is that this contract often denies the sickest patients sufficient care as physicians strive to improve on their performance. In a research published in Annals of Internal Medicine by the University of Pittsburgh and Harvard researchers, it was found that there was little or no improvement in the quality of healthcare or costs (Sullivan, para 2). Often, the use of performance-based contractors left many doctors penalized for caring for the sickest and the most deprived patients; their quality scores suffered. Therefore, it is evident that with the performance–based contract, hospitals, and doctors are more focused or inclined on bonus and benefits they receive, and not the quality of services they offer.
The objective of offering medical services is to ensure the wellbeing of the patients is achieved. However, in this type of contracting, the focus changes to monetary incentives, lowering patients’ satisfaction in the long run. Eldridge & Palmer (9) asserts that performance-based contracting is widely related to patients being given misleading information on the services provided, cost, and quality of the healthcare. Additionally, through the use of performance-based contracting, research shows that doctors’ job satisfaction has dramatically declined. Healthcare is a noble calling, and when the rules of engagement change from caring to money-centered, many doctors experience declined job satisfaction because they cannot save as many lives as they want and still maintain their quality points Thomas (5).
More so, in a report from Ankur Gupta and Colleagues, it was found that performance-based contracts rewarded and punished hospitals and doctors based on an arbitrary limit of heart failure patients’ admissions (Sullivan para 2). Thus, driven by benefits and bonuses, hospitals often turn down sicker patients because they view them as a burden that will only drag their reputation of higher quality scores and better pay. Additionally, the drive for performance incentive is ruining the honesty of medical professionals because health workers often give false information that indeed they have treated patients efficien