Pay for Performance – empirical evidence from the UK primary care: target payment and general practitioners’ service activity

Presenter: Qing Wang, Office of Health Economics (OHE)

Abstract

Rationale: Innovations in payment of health professionals have been pursued enthusiastically in both publicly and privately financed health systems, ranging from the Target payment and Quality Outcome Framework (QoF) for General Practitioners (GPs) in the UK NHS to the Pay-for-Performance (P4P) employed by the United States’ managed health care system (DoH, 1999; Lu et al, 2003). In the UK National Health Service (NHS), GPs play a key role. It is of great importance to understand GPs’ behaviour, especially their performance in response to financial incentives.

Objectives: The objective of this paper is to explore the possible impact of a specific payment method, the Target payment, on the GPs’ service activity. The Target payment, by linking the health professionals’ performance directly to payments, is set to incentivise health professionals’ to achieve performance targets.

Methodology: A systematic review of the Target payment and primary health care providers’ behaviour is conducted to identify empirical evidence to detect the impact of the Target payment. Based on the theoretical framework and standard economic models, hypotheses are generated and tested in the data analysis at national level, health authority level, and general practice level. Quasi-experimental study designs such as longitudinal, using segmented regression analysis (SRA) of the quarterly uptake rate data, and cross-sectional, applying multivariate regression analysis, are employed.

Results: The major finding of this paper is that, the Target payment has incentivised GPs to reach the performance targets, but has also raised risks for GPs, and consequently, brought potential un-intended effects. Two effects have been implied in the data analyses: firstly, the ‘target effect’, which was shown by GPs’ rapid achievement of the performance targets, i.e. 90% immunisation uptake level, after the Target payment policy; secondly, the ‘disenchantment effect’, which is indicated by the higher proportion of 0% uptake rate with the Targeted services, i.e. GPs have opted out supplying any service if they do not agree with the targets. The ‘disenchantment’ effect might be one of the most controversial aspects regarding to the effect of the Target payment or any performance-based payment policies.

Conclusions: Target payment is an effective way of changing GPs’ behaviour. The major message of the study in relation to healthcare policy-making is that Target payment methods might contribute to the achievement defined targets, but there might be some side-effects, such as the ‘disenchantment effect’. In view of this, the design of payment methods should be more specific and cautions must be exercised to avoid possible gaming and an extra administrative burden. It is extremely important to conduct pilot experiments of the financial incentive initiatives, especially when there are incredible technical difficulties in developing performance measures of public services, but this is not stressed sufficiently (Propper and Wilson, 2003).