Adverse events during hospital care are a global concern. The evidence for addressing unsafe acute care using pay-for-performance (p4p) is inconclusive. This research examined the association between the introduction of a financial penalty introduced by Australian policy on 1 July 2018 and the prevalence of 13 high-priority hospital-acquired complications (HACs) in Australian public hospitals.

The implementation of a financial penalty was associated with a substantial decline in hospital-acquired complications HACs. Few other p4p policies have been associated with reductions in inpatient harm. Future research should examine local HAC trends and investigate what other factors may have contributed to the change.

The study concludes that financial incentives can complement other efforts to achieve policy objectives. Attention should be paid to how schemes are designed and implemented, especially from a stakeholder perspective.

Key findings

• Evidence for p4p and hospital patient safety has been inconclusive.
• A p4p policy targeting hospital-acquired complications was introduced across Australia.
• The policy’s introduction was associated with a decline in complications.
• No evidence of gaming and systematic miscoding was observed.
• P4p can potentially complement other efforts to improve safety of hospital care.