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The Impact of a Pay‐for‐Performance Scheme on Prescription Quality in Rural China

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  • Xiaojie Sun
  • Xiaoyun Liu
  • Qiang Sun
  • Winnie Yip
  • Adam Wagstaff
  • Qingyue Meng

Abstract

In this prospective study, conducted in China where providers have traditionally been paid fee‐for‐service, and where drug spending is high and irrational drug prescribing common, township health centers in two counties were assigned to two groups: in one fee‐for‐service was replaced by a capitated global budget (CGB); in the other by a mix of CGB and pay‐for‐performance. In the latter, 20% of the CGB was withheld each quarter, with the amount returned depending on points deducted for failure to meet performance targets. Outcomes studied included indicators of rational drug prescribing and prescription cost. Impacts were assessed using differences‐in‐differences, because political interference led to non‐random assignment across the two groups. The combination of capitated global budget and pay‐for‐performance reduced irrational prescribing substantially relative to capitated global budget but only in the county that started above the penalty targets. Endline rates were still appreciable, however, and no effects were found in either county on out‐of‐pocket spending. Copyright © 2016 John Wiley & Sons, Ltd.

Suggested Citation

  • Xiaojie Sun & Xiaoyun Liu & Qiang Sun & Winnie Yip & Adam Wagstaff & Qingyue Meng, 2016. "The Impact of a Pay‐for‐Performance Scheme on Prescription Quality in Rural China," Health Economics, John Wiley & Sons, Ltd., vol. 25(6), pages 706-722, June.
    • Handle: RePEc:wly:hlthec:v:25:y:2016:i:6:p:706-722
    DOI: 10.1002/hec.3330
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    1. Martin Chalkley & Andrew J. Mirelman & Luigi Siciliani & Marc Suhrcke & Peter Berman, 2020. "Paying for Performance for Health Care in Low- and Middle-Income Countries: An Economic Perspective," World Scientific Book Chapters, in: Paul Revill & Marc Suhrcke & Rodrigo Moreno-Serra & Mark Sculpher (ed.), Global Health Economics Shaping Health Policy in Low- and Middle-Income Countries, chapter 6, pages 157-190, World Scientific Publishing Co. Pte. Ltd..
    2. Sambodo, Novat Pugo & Bonfrer, Igna & Sparrow, Robert & Pradhan, Menno & van Doorslaer, Eddy, 2023. "Effects of performance-based capitation payment on the use of public primary health care services in Indonesia," Social Science & Medicine, Elsevier, vol. 327(C).
    3. Dunsch, Felipe Alexander & Velenyi, Edit, 2019. "Job Preferences of Frontline Health Workers in Ghana - A Discrete Choice Experiment," SocArXiv bqx5k, Center for Open Science.

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