EconPapers    
Economics at your fingertips  
 

Accuracy versus Incentives

Aaron L. Schwartz

American Journal of Health Economics, 2021, vol. 7, issue 3, 333 - 360

Abstract: Health-care providers are increasingly subject to measurement of noisy performance signals. I show that shrinkage estimation, commonly used to improve the accuracy of performance measures, blunts performance incentives. I study this phenomenon in the setting of hospital performance measurement for heart attack mortality. Analysis of Medicare claims shows that shrinkage estimation substantially dilutes incentives, particularly for smaller hospitals, whose measured performance increases by only 20–40 percent of true performance improvements. Alternative methods like increasing the time-span of measurement can improve accuracy without reducing incentives.

Date: 2021
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://dx.doi.org/10.1086/714374 (application/pdf)
http://dx.doi.org/10.1086/714374 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:amjhec:doi:10.1086/714374

Access Statistics for this article

More articles in American Journal of Health Economics from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().

 
Page updated 2021-08-06
Handle: RePEc:ucp:amjhec:doi:10.1086/714374