PHYSICIAN RESPONSE TO PAY-FOR-PERFORMANCE: EVIDENCE FROM A NATURAL EXPERIMENT

Authors

  • Jinhu Li,

    Corresponding author
    1. Melbourne Institute of Applied Economic and Social Research, University of Melbourne, Carlton, VIC, Australia
    • Correspondence to: Melbourne Institute of Applied Economic and Social Research, University of Melbourne, 111 Barry Street, Carlton, VIC. 3010, Australia. E-mail: jinhu.li@unimelb.edu.au

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  • Jeremiah Hurley,

    1. Department of Economics, McMaster University, Hamilton, ON, Canada
    2. Centre for Health Economics and Policy Analysis, McMaster University, Hamilton, ON, Canada
    3. Department of Clinical Epidemiology and Biostatistics, McMaster University, Hamilton, ON, Canada
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  • Philip DeCicca,

    1. Department of Economics, McMaster University, Hamilton, ON, Canada
    2. Centre for Health Economics and Policy Analysis, McMaster University, Hamilton, ON, Canada
    3. National Bureau of Economic Research (NBER), Cambridge, MA, USA
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  • Gioia Buckley

    1. Centre for Health Economics and Policy Analysis, McMaster University, Hamilton, ON, Canada
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  • Institutions where research was conducted: Department of Economics, McMaster University; Centre for Health Economics and Policy Analysis, McMaster University; Melbourne Institute of Applied Economic and Social Research, University of Melbourne.

ABSTRACT

This study exploits a natural experiment in the province of Ontario, Canada, to identify the impact of pay-for-performance (P4P) incentives on the provision of targeted primary care services and whether physicians' responses differ by age, size of patient population, and baseline compliance level. We use administrative data that cover the full population of Ontario and nearly all the services provided by primary care physicians. We employ a difference-in-differences approach that controls for selection on observables and selection on unobservables that may cause estimation bias. We implement a set of robustness checks to control for confounding from other contemporaneous interventions of the primary care reform in Ontario. The results indicate that responses were modest and that physicians responded to the financial incentives for some services but not others. The results provide a cautionary message regarding the effectiveness of employing P4P to increase the quality of health care. Copyright © 2013 John Wiley & Sons, Ltd.

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