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Uncertainty about the effort–performance relationship in threshold-based payment schemes

Anne Sophie Oxholm, Søren Rud Kristensen and Matt Sutton

Journal of Health Economics, 2018, vol. 62, issue C, 69-83

Abstract: Incentive schemes often feature a threshold beyond which providers receive no additional payment for performance. We investigate whether providers’ uncertainty about the relationship between effort and measured performance leads to financially unrewarded performance in such schemes. Using data from the British Quality and Outcomes Framework, we proxy general practitioners’ uncertainty about the effort–performance relationship by their experience with the scheme and their span of control. We find evidence that providers respond to uncertainty by exerting financially unrewarded performance, suggesting that uncertainty may be a mechanism by which payers can extract unrewarded performance.

Keywords: Pay for performance; Uncertainty; Threshold; Provider behaviour (search for similar items in EconPapers)
JEL-codes: I10 (search for similar items in EconPapers)
Date: 2018
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Journal of Health Economics is currently edited by J. P. Newhouse, A. J. Culyer, R. Frank, K. Claxton and T. McGuire

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