Integrating quality into healthcare pricing systems

Systematic literature review on options for integrating quality into healthcare pricing systems

(Australian Commission on Safety and Quality in Health Care)
Duration: September 2012 – March 2013


This review is part of a larger work program being managed jointly by the Australian Commission on Safety and Quality in Health Care (the Commission) and the Independent Hospital Pricing Authority (IHPA). The purpose of this literature review is to review the evidence on existing mechanisms in operation which aim to integrate quality and safety into the pricing or funding arrangements for health care. We considered this relatively small project to be critical in the context of current national health reforms including the introduction of a national model of Activity Based Funding.

What we did

For this project, we applied a rapid but rigorous search strategy to identify literature related to integrating quality and safety into healthcare pricing or funding systems. The review considered a number of overarching models including best practice pricing, normative pricing, quality structures pricing and payment for performance.

The literature revealed that the key considerations in the implementation of such models were the creation of substantial and targeted incentives, the development of a meaningful impact evaluation model, and the inclusion of methodologies for risk adjustment.

Our key conclusions were that there is insufficient international evidence at present to support the ‘off the shelf’ adoption of any existing pricing model that incorporates financial incentives and/or sanctions for quality and safety; and that, overall, the strongest evidence on how to genuinely improve quality and safety exists for clinical quality registry and benchmarking systems which typically have no links to funding.

Final report

Eagar K, Sansoni J, Loggie C et al. (2013) A Literature Review on Integrating Quality and Safety into Hospital Pricing Systems. Centre for Health Service Development, University of Wollongong.

Last reviewed: 8 July, 2016

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