A Three-Phase Methodology for Evaluating a Pay-for-Performance Plan to Reduce Healthcare-Associated Infections

Open Access
Amirtharaj, Dominic Savio
Graduate Program:
Industrial Engineering
Master of Science
Document Type:
Master Thesis
Date of Defense:
April 07, 2014
Committee Members:
  • Harriet Black Nembhard, Thesis Advisor
  • Healthcare-Associated Infections
  • DEA
  • Financial Incentives
Healthcare-Associated Infections (HAI) impose a considerable strain on the nation’s healthcare system. The Centers for Disease Control and Prevention (CDC) estimates that 1 out of every 20 hospitalized patients contract some form of a HAI. In addition to the resulting morbidity and mortality, HAI have contributed significantly to the escalating cost of hospital care. A CDC economist estimates the overall direct medical costs of all HAI in the United States to be in the range of $28.4 to $33.8 billion in 2009 after a Consumer Price Index (CPI) adjustment for urban consumers and $35.7 to $45 billion after a CPI adjustment for inpatient hospital services (Scott, 2009). Since approximately 70 percent of HAI are preventable, there has been substantial attention to the benefits and approaches for prevention. In the evolution of managed care, a pay-for-performance (P4P) plan is increasingly used to incentivize improvement. As insurance providers move towards more deployment of the plan, evaluating the incentives for hospitals to participate is an important aspect of assessing a broader implementation. As costs in the healthcare economy rise, firms and consumers are propelled to make more rigorous decisions. This exposes many opportunities to evaluate and improve HAI prevention models using financial incentives and novel reimbursement structures. This thesis explores a specific type of HAI – Central Line Associated Blood Stream Infections (CLABSI) – and analyzes how insurers and hospitals may reassess decisions tied to P4P incentives to mitigate its occurrence. We propose and use a three-phase methodology to study these financial incentives, The Exploratory Phase addresses the data requirements and the identification of Key Performance Indicators (KPI). The Operational Phase addresses the Cost Benefit Analysis (CBA) and Return on Investment (ROI). The Evaluation Phase addresses efficiency using Data Envelopment Analysis (DEA) and results interpretation. A proof-of-concept and refinement the methodology is developed through two case studies. In the first case study, the performance on CLABSI by five hospitals is simulated using data reported publically by hospitals to the Pennsylvania Health Care Cost Contain¬ment Council (PHC4). In the second case study, the performance on CLABSI of 59 hospitals is analyzed using data reported to the National Healthcare Safety Network (NHSN). Through these cases, we are able to examine the costs that accrue over time for hospitals that meet their quality performance goals and for those who do not. Moreover, we can determine precisely what is necessary for non-efficient hospitals to become more efficient at averting CLABSI through a better use of monetized resources. Based on this study, we also identify avenues for future research in evaluating financial incentives on HAI mitigation.