The need for performance improvement in healthcare delivery has been a central focus of purchasers, payers, regulators and providers in the United States for some time. While there has been significant efforts by providers to advance quality outcomes, improve safety and reduce costs and increase patient satisfaction, these efforts have not yet taken us to where we need or want to be as an industry. More than five years ago, a consortium of policy makers, regulators and the Federal government through the National Quality Forum began pushing providers for a paradigm shift in the way healthcare is delivered. The Centers for Medicaid and Medicare Services (CMS) and The Joint Commission in particular, began requiring hospitals to report on key quality metrics (i.e. patient satisfaction, medication errors, falls, readmissions and more) believing that transparency would increase accountability.

While performance improvement has been a common topic in the hospital boardroom and often executive compensation has been tied to quality, cost and service outcomes, this push was not enough. However with healthcare’s performance not changing at a desired rate, it became apparent that the talk and transparency around quality performance was not enough to change the way we deliver care.

That is all changing. For the first time in history, provider payment will be tied to performance. With the passing of the Affordable Care Act in 2010, several high-impact pay-for-performance programs have been introduced and set for launch over the next 2 years. Regulators and purchasers of healthcare are now facilitating an aggressive movement from our traditional volume-based payment system to a value-based payment system.

New payment provisions, including incentives and penalties, have been defined and will be administered by CMS. Through the American Recovery and Reinvestment Act and the Affordable Care Act, hospitals will see dramatic shifts in top-line revenues as a result of new pay-for-performance programs and the Meaningful Use program.