BACKGROUND: Public reporting and pay for performance are intended to accelerate improvements in hospital care, yet little is known about the benefits of these methods of providing incentives for improving care. METHODS: We measured changes in adherence to 10 individual and 4 composite measures of quality over a period of 2 years at 613 hospitals that voluntarily reported information about the quality of care through a national public-reporting initiative, including 207 facilities that simultaneously participated in a pay-for-performance demonstration project funded by the Centers for Medicare and Medicaid Services; we then compared the pay-for-performance hospitals with the 406 hospitals with public reporting only (control hospitals). We used multivariable modeling to estimate the improvement attributable to financial incentives after adjusting for baseline performance and other hospital characteristics. RESULTS: As compared with the control group, pay-for-performance hospitals showed greater improvement in all composite measures of quality, including measures of care for heart failure, acute myocardial infarction, and pneumonia and a composite of 10 measures. Baseline performance was inversely associated with improvement; in pay-for-performance hospitals, the improvement in the composite of all 10 measures was 16.1% for hospitals in the lowest quintile of baseline performance and 1.9% for those in the highest quintile (P<0.001). After adjustments were made for differences in baseline performance and other hospital characteristics, pay for performance was associated with improvements ranging from 2.6 to 4.1% over the 2-year period. CONCLUSIONS: Hospitals engaged in both public reporting and pay for performance achieved modestly greater improvements in quality than did hospitals engaged only in public reporting. Additional research is required to determine whether different incentives would stimulate more improvement and whether the benefits of these programs outweigh their costs.
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