Rural Health Providers Face Pay-For-Performance Challenges

Minneapolis, Minn. -- A recently completed study reveals that the conditions for successful participation in pay-for-performance initiatives affect rural health care providers differently than urban providers. The study calls for future initiatives to include technical assistance for participating rural hospitals and also ensure that clinical areas that are tied to payment are relevant to the type of services delivered by small rural hospitals.

These findings are part of a report just released by the Upper Midwest Rural Health Research Center (UMRHRC), a partnership between the University of Minnesota and the University of North Dakota, in collaboration with Premier, Inc., titled, “The Implementation of Pay-For-Performance in Rural Hospitals: Lessons from the Hospital Quality Incentive Demonstration Project.”

Pay-for-performance sets different payment levels for health care providers based on their performance on a set of measures of quality. Pay-for-performance efforts generally encompass four key elements: a set of quality measures, procedures to gather performance information, a process to disseminate the performance information, and an incentive payment approach that encourages quality practices.

The UMRHRC study looked at the rural implications of the Centers for Medicare and Medicaid Services’ Hospital Quality Incentive Demonstration Project (HQID). Rural facilities are often more isolated, provide a more narrow scope of services and have smaller patient volumes, all affecting the impact of pay-for-performance programs.

The study found that the self-evaluation that takes place through the pay-for-performance process has more of an impact on rural provider behaviors than financial incentives, especially for low-volume providers.

“Rural physicians and nurses are more motivated by feedback on the quality of care they are providing to their patients than by financial incentives offered to the hospital,” said Walt Gregg. “The close-knit culture of many small, remote rural communities may benefit rural hospitals more than financial incentives because they can enhance the positive effects of peer recognition and social support among hospital staff.”

The study found that the majority of small rural hospitals participating in the HQID had a limited information system infrastructure, staff and capital, making the implementation of pay-for performance programs challenging. However, Gregg notes that “the rural hospitals displayed considerable innovation in overcoming system barriers to participation”.

The study calls for future pay-for-performance programs to include a range of incentives independent of patient volume including accommodating varying degrees of information system sophistication and encouraging health information network collaborations among providers.

The UMRHRC was designated as one of eight rural health research centers in the nation funded by the U.S. Department of Health and Human Services Office of Rural Health Policy last year. Through the partnership, the University of Minnesota Rural Health Research Center in the School of Public Health and the Center for Rural Health at the University of North Dakota School of Medicine and Health Sciences combines research and information dissemination expertise to undertake national projects focusing on quality of rural health care.

A copy of the report and more information about the UMRHRC are available at: http://www.uppermidwestrhrc.org/

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Contact: Walter Gregg, University of Minnesota Rural Health Research Center, 612-626-6271, gregg006@umn.edu

Wendy Opsahl, University of North Dakota Center for Rural Health, 701-777-0871, wopsahl@medicine.nodak.edu

11-28-06