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Physician Response To Pay‐For‐Performance: Evidence From A Natural Experiment

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  • Jinhu Li
  • Jeremiah Hurley
  • Philip DeCicca
  • Gioia Buckley

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.

Suggested Citation

  • Jinhu Li & Jeremiah Hurley & Philip DeCicca & Gioia Buckley, 2014. "Physician Response To Pay‐For‐Performance: Evidence From A Natural Experiment," Health Economics, John Wiley & Sons, Ltd., vol. 23(8), pages 962-978, August.
    • Handle: RePEc:wly:hlthec:v:23:y:2014:i:8:p:962-978
    DOI: 10.1002/hec.2971
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    More about this item

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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