Do Pay-For-Performance (P4P) Incentives for Physicians Improve the Quality of Health Care?

Pay-for-Performance (P4P) in Ontario caused primary care physicians to increase, though only modestly, the provision of some effective medical services but not others. Therefore, policymakers should be cautious about using P4P to improve the quality of physician care.

McMaster Researcher


Li, J., Hurley, J., DeCicca, P., & Buckley, G. (2014). PHYSICIAN RESPONSE TO PAY‐FOR‐PERFORMANCE: EVIDENCE FROM A NATURAL EXPERIMENT. Health Economics, 23(8), 962-978. doi:10.1002/hec.2971

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What is this research about?

Many countries try to improve the quality of healthcare by using pay-for-performance (P4P) schemes to provide physicians with financial incentives to provide services associated with better quality. However, the effectiveness of P4P schemes has not been established; research on P4P varies in quality and generalizability, and the findings are mixed.
The nature of the P4P program in Canada and its single-payer universal healthcare system, is well suited to address many of the challenges faced by studies of this kind. Ontario's P4P scheme was introduced into primary care in 2002 to increase rate of delivery of specified preventive services, such as toddler immunization.  General practitioners (GPs) practicing in "primary care reform" practices (rather than traditional fee-for-service (FFS) practices) were eligible to receive the P4P bonuses. The purpose of this research was to determine:

  1. Whether GPs responded to P4P by increasing the provision of targeted preventive care services, including flu shots for seniors, toddler immunization, Pap smears, mammograms, and colorectal cancer screenings.
  2. Whether the effects of P4P schemes on physician service provision differ across different physicians and practices.

What did the researchers do?

The researchers from McMaster University used databases provided by the Ontario Ministry of Health and Long-Term Care to gather information on each GP's practice population and the services they provided to their patients each year from 1998-2008. This study focused on a sample of 2154 GPs practicing the four dominant primary care reform practice models and FFS practices.  The researchers identified the impact of the P4P incentives by comparing changes in the rates of provision of the targeted preventive care services before and after the introduction of P4P incentives for those physician eligible for them against the rates of change over the same period for those GPs not eligible for the P4P incentives.

What did the researchers find?

The researchers found that:

  • Ontario's P4P incentives induced only a modest improvement in performance with respect to mammograms, Pap smears, senior flu shots, and colorectal cancer screenings. P4P incentives do not result in improvements in toddler immunization.
  • The findings are consistent across a series of statistical models that are designed to account for factors that could bias this result.
  • Physicians' responses to P4P also vary with their age, practice size, and the level of service physicians offered before P4P financial incentives were introduced. For example, younger physicians responded to P4P bonuses more than did older physicians by providing more Pap smears, mammograms, and colorectal cancer screenings, but not flu shots or toddler immunizations.

How can you use this research?

The results from this research provide caution for policymakers interested in using P4P to increase the quality of primary physician care. It is important to understand these aspects of P4P before policymakers can implement incentive-based policies that improve the quality of physician care.

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