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The Effect of Financial Incentives on Quality of Care: The Case of Diabetes

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Author Info
Anthony Scott () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
Stefanie Schurer () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
Paul H. Jensen () (Melbourne Institute of Applied Economic and Social Research, The University of Melbournehor-Workplace-Name: Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)
Peter Sivey () (Melbourne Institute of Applied Economic and Social Research, The University of Melbourne)

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Abstract

Australia introduced an incentive payment scheme for general practitioners to ensure systematic and high quality care in chronic disease management. There is little empirical evidence and ambiguous theoretical guidance on which effects to expect on the quality of care. This paper evaluates the impact of the payment incentives on quality of care in diabetes, as measured by the probability of ordering an HbA1c test. The empirical analysis is conducted with a unique data set and a multivariate probit model to control for the simultaneous self-selection process of practices into the payment scheme and larger practices. The study finds that the incentive reform had a positive effect on quality of care in diabetes management and that participation in the scheme is facilitated by the support of Divisions of General Practice.

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Paper provided by Melbourne Institute of Applied Economic and Social Research, The University of Melbourne in its series Melbourne Institute Working Paper Series with number wp2008n12.

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Length: 30 pages
Date of creation: Jul 2008
Date of revision:
Handle: RePEc:iae:iaewps:wp2008n12

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  1. M. Lippi Bruni & L. Nobilio & C. Ugolini, 2007. "Economic Incentives in General Practice: the Impact of Pay for Participation Programs on Diabetes Care," Working Papers 607, Dipartimento Scienze Economiche, Universita' di Bologna. [Downloadable!]
  2. Chiara Monfardini & Rosalba Radice, 2008. "Testing Exogeneity in the Bivariate Probit Model: A Monte Carlo Study," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 70(2), pages 271-282, 04. [Downloadable!] (restricted)
  3. Mundlak, Yair, 1978. "On the Pooling of Time Series and Cross Section Data," Econometrica, Econometric Society, vol. 46(1), pages 69-85, January. [Downloadable!] (restricted)
  4. Balia, Silvia & Jones, Andrew M., 2008. "Mortality, lifestyle and socio-economic status," Journal of Health Economics, Elsevier, vol. 27(1), pages 1-26, January. [Downloadable!] (restricted)
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  5. Scott, Anthony & Shiell, Alan, 1997. "Do fee descriptors influence treatment choices in general practice? A multilevel discrete choice model," Journal of Health Economics, Elsevier, vol. 16(3), pages 323-342, June. [Downloadable!] (restricted)
  6. Martin Chalkley & Colin Tilley, 2006. "Treatment intensity and provider remuneration: dentists in the British National Health Service," Health Economics, John Wiley & Sons, Ltd., vol. 15(9), pages 933-946. [Downloadable!]
  7. Mooney, Gavin & Ryan, Mandy, 1993. "Agency in health care: Getting beyond first principles," Journal of Health Economics, Elsevier, vol. 12(2), pages 125-135, July. [Downloadable!] (restricted)
  8. Lorenzo Cappellari & Stephen P. Jenkins, 2006. "Calculation of Multivariate Normal Probabilities by Simulation, with Applications to Maximum Simulated Likelihood Estimation," IZA Discussion Papers 2112, Institute for the Study of Labor (IZA). [Downloadable!]
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  9. Hugh Gravelle & Matt Sutton & Ada Ma, 2008. "Doctor Behaviour Under a Pay for Performance Contract: Further Evidence from the Quality and Outcomes Framework," Working Papers 034cherp, Centre for Health Economics, University of York. [Downloadable!]
  10. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March. [Downloadable!] (restricted)
  11. Patrick Francois & Michael Vlassopoulos, 2008. "Pro-social Motivation and the Delivery of Social Services," CESifo Economic Studies, Oxford University Press, vol. 54(1), pages 22-54, March. [Downloadable!] (restricted)
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