Can You Get What You Pay For? Pay-for-Performance and the Quality of Healthcare Providers

Abstract

Despite the popularity of pay-for-performance (P4P) among health policymakers and private insurers as a tool for improving quality of care, there is little empirical basis for its effectiveness. The authors use data from published performance reports of physician medical groups contracting with a large network HMO to compare clinical quality before and after the implementation of P4P, relative to a control group. They consider the effect of P4P on both rewarded and unrewarded dimensions of quality. In the end, they fail to find evidence that a large P4P initiative either resulted in major improvement in quality or notable disruption in care.

Keywords: pay-for-performance, healthcare, quality, multitasking

JEL Classification: D23, I12, H51