RNs and Pay-for-Performance: The Right Prescription?

  1. Introduction

    Registered nurses are increasingly challenged by the pace and scope of change in the health care industry. Cost cutting and consolidation continue as RN employers seek to improve financial performance and remain competitive in their markets. For nurses, this can translate into pay-for-performance programs which their employers see as a way of reducing labor costs while increasing productivity and quality of care by motivating nurses with financial incentives. The purpose of this pamphlet is to briefly describe the main features of these compensation programs and suggest questions you should ask and steps you should take if your employer implements or proposes such a pay system.

    What Are Pay-for-Performance Programs?
    Pay-for-performance programs go under a variety of names: contingent or "at-risk " pay, variable pay, profit sharing, gainsharing, to mention only a few. Their common denominator is the linking of financial rewards for employees to improvements in the performance of the group.

    Gainsharing, for example, emphasizes three key features: participation, achievement, and rewards. Gainsharing presupposes that all employees of an organization, if given the chance, can participate and contribute beyond the minimum or standard level of performance. Achievement emphasizes reducing costs and increasing profits and focuses on group rather than individual performance to improve productivity. Rewards are usually in the form of cash, paid at regular intervals.

    Pay-for-performance programs for non-management hospital-employed registered nurses are relatively new. Nonetheless, employers nationwide are considering such programs, and one major HMO has recently instituted a "performance outcome program" designed to provide monetary incentives to registered nurses in exchange for reduced costs and increased patient satisfaction. Registered nurses must now seriously consider the appropriateness of incentive pay programs.

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  3. by   oramar
    Interesting, seems like something different to me. Have to think about it for a while before I decide if I like it or not.
    Last edit by oramar on Jan 12, '03
  4. by   donmurray
    Performance related pay only works for CEO's. How do you evaluate a nurse's performance, what standards do you measure against, and how do you separate out the individual's contribution to what is essentially a team activity? Come to think of it, Nursing may be the major part of a range of care provision that the patient receives, but it is not the only one. Does a nurses pay then depend on the quality of the food served, for example, over which they have no control? Bad idea in my book.
  5. by   Glad2behere
    I think it depends on who is doing the evaluation and who sets the criteria for performance. There is a lot of documented success for companies who use peer evaluations to establish and maintain employee retention and performance. There is a lot to be learned there that healthcare has surrendered to sanctioning bodies and administration to police, grade, and promote job performance and professional acuity.
  6. by   -jt
    Does the nurse get to evaluate & rate her own performance? I dont agree with anything that ties a nurses salary to someone elses subjective personal opinion of how she performs. Its not like shes in marketing & can show in black & white an improved productivity by the amount of sales increases that soared after she implemented a new program. We have no control over some things - like short staffing. How much can you do when you have 10 pts at once, no support services, limited supplies & equipment, & are dead on your feet after a forced 16 hrs. The pts are bound to not be "satisfied" &, if the RNs salary is based on that, the RN ends up paying for a system that the administration has set up to fail. No wonder it will cut the hospitals costs.

    BTW, my hospital sends out a "customer" satisfaction survey - taken right from the one the Ritz Carlton Hotel uses - they just added the words "nursing staff".
    Was your nursing staff pleasant
    Was you nursing staff polite
    Did your nursing staff answer your questions to your satisfaction
    Did your nursing staff respond to your call bell in a timely fashion.

    Even if it wasnt the RN that the pt is not satisifed with, there is no distinction made. I dont want my salary dependent upon this kind of nonsense.
  7. by   obeyacts2
    How could a system devised for general customer svc be appp;ied to nursing? Suppose you have a pt in ICU/CCU with a MI who suddenly codes and dies? What is the family going to say on the questionnaire? I can see a nurse getting blasted over circumstamces out of thier contral. Not to mention, Florence Nightengale couldnt satisfy some folks.

  8. by   Glad2behere

    The operative word here is peer. And you also make another assumption that is not necessarily true. That an evaluation is bad and nothing good comes from it. Nurses know who the good nurses are and who are not, are you unwilling to trust your coworkers? A hotel questionaire like you stated is a dubious effort, almost a joke, and I am laughing with you on that one. If a policy is initiated from administration to rate performance, yes, I would be in your camp. An evaluation mechanism by nurses of nurses may not be so bad, and can be utilized as an educational tool as well. It does not mean anyone has to be fired, dismissed, or dealt with in such harsh terms. Again, going back to my original premise of WHO is doing the evaluation on whom as a plausible idea worthy of some studious thought.
  9. by   OC_An Khe
    Have to agree with -jt on this one.
    Lets see peer reveiw, I guess that means fellow staff RNs or is it management RNs?
    RNs are going to agree on something? Or ADN who feel BSN or diploma (mix it anyway you like) don't make good nurses. Or nurses who think 10 patients on Med Surg are acceptable... Or lets personal likes/dislikes or just plain witchiness color their judgement.
    The profession has a long way to go before this type of compensation system is feasible let alone be implemented.
  10. by   Glad2behere
    ocankhe and jt,

    Yielded. Probably true. We have a long, long way to go. I neglected the "cattie" factor entirely.
  11. by   Sleepyeyes
    The fact that they're trying to find ways to cut costs and saying "RN" in the same sentence, says it all to me.

  12. by   -jt
    <Again, going back to my original premise of WHO is doing the evaluation on whom as a plausible idea worthy of some studious thought.>

    I didnt see any mention of the words peer review in the article up there. But I do think peer review has its place - just not in deciding my salary. At my hospital, the nurses can nominate another RN from their unit for the employee of the month - and a monetary award is given to the deserving RN (this month we actually gave the award to the evening shift RN supervisor - believe or it she deserves it). Also RNs from each unit can nominate their deserving peers for the annual benefactors award, which is also monetary. One RN from each area is then selected by a committee. Peer review is fine for educating RNs, improving performance, & awarding extra bonuses like these for outstanding effort. I just dont want them deciding my salary for me or having my yearly wages depend on their opinions.

    I am a firm believer in collective bargaining --- in the RNs themselves deciding what a nurse will be paid & the amount that annual raises will be at their facility. If an individual RNs annual salary is to be determined by "pay-for-performance", even if it is by peer review, no thanks.
    Last edit by -jt on Jan 13, '03
  13. by   -jt

    Ill tell you right now that if we had to depend on peer review for our annual salary, some of us would still be earning the same salary we started with 20 yrs ago because unlike some of our co-workers, right from the start we have refused to do the housekeeper's job, the secretaries job, the kitchen staff's job, the messenger's job, the tech's job, the porter's job & the transporter's job. Some doormat RNs think that we all should be doing everything as more & more support staff is cut & that those of us who dont do it "arent doing our fair share". The doormats would not be giving their peers who stood their ground a very good evaluation. And sadly, it would have nothing to do with their performance as an RN.
    Last edit by -jt on Jan 13, '03
  14. by   -jt
    Yesterday the charge RN told me to push my pts bed from one room to another that was larger. The pt is over 400 lbs & is on a KinAir bed. I told her I was not the transporter & I called the nursing supervisor to send some of those guys over to move this pt & I went to take care of my other pt. So the move didnt get done right away but it did get done - by the people whose job it is to do it. But the charge RN concluded that I was "just being difficult".

    Tonight, after spending 2 hrs de-licing my unconscious, ventilated, dopamined, post code, intoxicated, hypothermic, homeless-living-on-the-subway, John Doe new admission, another charge RN told me to help her wash down & disinfect the bed scale, broken IV pumps, & other equipment that were to be taken out of the room. I told her no - and I asked housekeeping to take care of it. He promptly disappeared. The charge RN told me to "just do it" so it can be done & finished. I called the supervisor & told her to send someone up to disinfect the equipment. She did - but an hour later. So what? So the charge RN was annoyed because by the time the porter finally did it, we could have already been finished. Maybe, but then my other pt would have gotten his meds late & I am there to be an RN, not to wash equipment. Still I dont think she'd give me a good peer evaluation because I didnt do what she told me to do. My performance as an RN wouldnt even be considered.
    Last edit by -jt on Jan 13, '03