Exploring the potential of Data Envelopment Analysis for enhancing pay-for-performance programme design in primary health care

In recent years, implementation of pay-for-performance (P4P) programmes in health care has become a worldwide initiative. However, most P4P programmes incorporate systems of Performance Indicators (PI) without accounting for trade-offs between indicators. This article has two objectives: (1) to develop a Data Envelopment Analysis (DEA) methodology for performance assessment of primary care providers; and (2) to propose an innovative methodology for P4P contracting based on the DEA assessment results. To achieve the first objective, we modify the standard DEA model to account for the necessary relations between the weights attributed to each PI and domain of performance and to account for the effect of the relevant environmental variables. To achieve the second objective, we combine relative and absolute performance assessments in the elaboration of several bases for reward, and then we link these assessments to a system of graduated rewards. A benchmarking programme is also proposed to contribute to the dissemination of best practices. This article contributes to the literature by proposing an enhanced methodology for performance assessment of primary care providers which can form the basis for P4P rewards planning. The applicability and advantages of the proposed methodology are illustrated with data from Portugal, but it can easily be adapted to different sets of PIs or domains, making it relevant for performance assessment and for P4P reward setting in other contexts and countries.