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Global Health Policy Blog


For better or worse, there are many lessons other countries can learn from the United States’ experience in health care. For a positive lesson, let’s consider payment disincentives for reducing hospital-acquired conditions. These are preventable complications acquired in the hospital and include issues such as patient injuries, infections from catheters, and “foreign objects retained after surgery.” As seen with the “superbug” obtained through contaminated medical endoscopes earlier this year, these shortfalls in hospital quality are not only painful and risky for patients, they are also costly and wasteful. These issues are highly prevalent: in 2013 one in eight hospital admissions in the US included a patient injury. And matters are worse in poor countries. According to WHO, infection rates among newborns in developing countries are 3 to 20 times higher than in high-income countries.

In the United States, the government has started prodding hospitals to combat these issues by denying payments or imposing penalties when they fail to meet standards of quality care. One powerful tool the government uses to do this is Medicare—the federal government’s insurance program for Americans over the age of 65. In 2008, Medicare stopped paying hospitals for treating conditions that were acquired during hospitalization and could have been prevented. In 2014, Medicare introduced a program that can withhold up to three percent of payments from hospitals with high rates of avoidable readmissions. And in 2015, Medicare went one step further, imposing penalties on hospitals that don’t perform well. Although Medicare is also experimenting with bonus payments for good performance, we can expect one in seven US hospitals to have its Medicare payments reduced by one percent this year—a stark prediction likely to get hospitals across the country to pay more attention to the quality of care.

So what lessons can be learned for developing countries?

First, make use of payment systems and incentives. Health systems in many developing countries are evolving to cope with the growth of chronic illnesses and to introduce and push for universal health coverage schemes. One likely consequence is that hospitals will become more important and there is scope for rethinking current payment systems to target issues like health care quality. The US experience with payment incentives and disincentives could offer useful insights into how best to prevent and remedy quality shortfalls in hospitals. That includes experimentation: some of Medicare’s pay-for-performance “demonstration projects” showed initial promise but didn’t lead to longer-term improvements, whereas the 2008 initiative seems to have generated improvements.

Second, invest in reliable, accurate data. The ability to implement health policies hinges on reliable data—and therefore good information systems and strong verification processes. Medicare’s approach has been to incentivize hospitals for reporting on a rotating set of (well-defined) quality measures. US hospitals have also gotten savvy with using their own data systems to improve quality, partly because of financial incentives. Around the world, there are already calls for improved data and data systems, including for health data. Health care systems in developing countries should leverage these calls and make reliable data a priority—accurate health data can literally save lives and money.

Improving quality of care may be low-hanging fruit that helps patients’ health and government budgets, especially when it comes to clearly harmful and costly issues like hospital-acquired conditions. Settings like the US can offer useful (and successful) examples on how to tackle quality issues by smartly combining incentives and data. Raising awareness of the technical knowledge and adapting these experiences to developing countries could provide great value for money.


CGD blog posts reflect the views of the authors drawing on prior research and experience in their areas of expertise. CGD does not take institutional positions.