Hospitals Chase Medicare's Performance-Based Bonuses

The chief executive officer of a Florida hospital decided to go undercover. He skipped shaving for two days late last year, donned a baseball cap, and laid down on a stretcher to feign being ill. The ruse was all part of an effort by HCA Holdings, the biggest for-profit hospital company in the U.S., to find out what it’s really like to be one of its customers. “He was able to see things the way patients do,” says Jonathan Perlin, chief medical officer at HCA, based in Nashville. “I can assure you every ceiling tile with a water stain got replaced.”

Hospitals across the U.S. are trying to make patient stays more pleasant—because there’s money waiting for them if they do. The government will dole out almost $1 billion this year in bonus Medicare payments to hospitals, based in part on how well they perform on patient surveys.