Financial incentives for ambulatory care performance improvement.

BACKGROUND: Measuring and improving the quality of care while curtailing costs are essential objectives in capitated care. As patient care moves from the hospital to outpatient settings, quality management resources must be shifted to ambulatory care process improvement. The Quality Improvement and Efficiency Financial Incentives Program at Stanford University Medical Center was adopted to increase quality improvement efforts and contain costs. THE INCENTIVE PROGRAM: Each department's budget for care of capitated patients was reduced by 5% from the previous year. Return of a reserve fund (10% of payments for specialty care) required completion of substantive quality improvement projects and containing costs. Successful departments were also eligible for bonus funds. Implementation strategies included endorsement by clinical leaders, physician education, use of administrative data to identify project topics and support measurement of quality and cost variables, project templates and time lines, and the availability of clinical quality managers with special expertise in clinical process improvement. RESULTS: Eight of 13 clinical departments developed and implemented 19 ambulatory quality improvement projects to varying degrees. Success in the program was roughly correlated with the potential impact of the incentive on revenues and the status of the lead person selected by the department to spearhead their efforts. Only 5 departments achieved their cost containment goals. DISCUSSION: Financial incentives are one method of encouraging physicians to use clinical process improvement methods. Endorsement by clinical leaders and selection of realistic beginning projects enhance chances for success. The capitated population has attributes that make it an attractive focus for initial quality improvement efforts.