Potential Impact of Pay-for-Performance on the Financial Health of CAHs (Policy Brief #12)

Publication Date: Feb 2010
Author(s): Town R, Moscovice IS
Research Center(s): Minnesota
Topic(s): Finance, Pay-for-Performance

This study, summarized in the policy brief below, models the impact of different pay-for-performance (P4P) incentives on the financial health of Critical Access Hospitals (CAHs).  


  • Pay-for-performance (P4P) incentives likely reduce the financial status of CAHs already in financial stress. However, P4P incentives are likely to have only a modest impact on the financial stability of CAHs.
  • If P4P programs lead to increased hospital quality, those benefits would not have to be accomplished at the expense of putting CAHs in greater financial jeopardy.
  • CAHs should be included in future P4P initiatives to provide a clear understanding of how payment incentives affect the quality of care in small rural hospitals.