IDEAS home Printed from
   My bibliography  Save this paper

Incentives In Primary Care and Their Impact on Potentially Avoidable Hospital Admissions



Financial incentives in primary care have been often introduced with the purpose of improvingappropriateness of care and containing demand. We usually observe pay-for-performance programs, but alternatives have been also implemented, such as pay-for-participation in improvement activities and pay-for-compliance with clinical guidelines. Here, we assess the influence of different programs which ensure extra-payments to GPs, for containing episodes of avoidable hospitalisations. Our dataset covers patients and GPs of the Italian region Emilia-Romagna for year 2005, and we control for a wide range of factors potentially influencing GPs’ behaviour. By separating pay-for-performance from pay-for-participation and pay-for-compliance programs, we estimate the impact on the probability of (inappropriate) hospitalisation of financial incentives included in contracts between GPs and the NHS. As dependent variable, we consider two different sets of conditions, for both of which timely and effective primary care should be able to limit the need of hospital admission. The first is based on 27 medical DRGs that Emilia-Romagna identifies as at risk of inappropriateness in primary care, while the second refers to the internationally recognised ACSCs (ambulatory care-sensitive conditions). We show that pay-for-performance schemes may have a significant effect over aggregate indicators of appropriateness, while the effectiveness of pay-for-participation schemes is adequately captured only by taking into account subpopulations affected by specific diseases. Moreover, the same incentive scheme has fairly different effects on the two sets of indicators used, with performance improvements limited to the target explicitly addressed by the policy maker (i.e. the list of 27 DRGs). This evidence is consistent with the idea that a “tunnel vision” effect may occur when public authorities promote and monitor specific sets of objectives, as proxies for more general improvements in health care practices.

Suggested Citation

  • G. Fiorentini & E. Iezzi & M. Lippi Bruni & C. Ugolini, 2009. "Incentives In Primary Care and Their Impact on Potentially Avoidable Hospital Admissions," Working Papers 660, Dipartimento Scienze Economiche, Universita' di Bologna.
  • Handle: RePEc:bol:bodewp:660

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    1. P.C. Smith, 2002. "Measuring health system performance," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 3(3), pages 145-148, September.
    2. Victor Lavy, 2009. "Performance Pay and Teachers' Effort, Productivity, and Grading Ethics," American Economic Review, American Economic Association, vol. 99(5), pages 1979-2011, December.
    3. Canice Prendergast, 1999. "The Provision of Incentives in Firms," Journal of Economic Literature, American Economic Association, vol. 37(1), pages 7-63, March.
    4. Bruno S. Frey & Reto Jegen, 2000. "Motivation Crowding Theory: A Survey of Empirical Evidence," CESifo Working Paper Series 245, CESifo Group Munich.
    5. Geir Godager & Tor Iversen & Ching-To Ma, 2009. "Service motives and profit incentives among physicians," International Journal of Health Economics and Management, Springer, vol. 9(1), pages 39-57, March.
    6. Scott, A & Schurer, S & Jensen, P H & Sivey, P, 2008. "The Effects of Financial Incentives on Quality of Care: The Case of Diabetes," Health, Econometrics and Data Group (HEDG) Working Papers 08/15, HEDG, c/o Department of Economics, University of York.
    7. David Cutler, 2006. "The Economics of Health System Payment," De Economist, Springer, vol. 154(1), pages 1-18, March.
    8. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    9. Nigel Rice & Andrew Jones, 1997. "Multilevel models and health economics," Health Economics, John Wiley & Sons, Ltd., vol. 6(6), pages 561-575.
    10. W. J. Browne & S. V. Subramanian & K. Jones & H. Goldstein, 2005. "Variance partitioning in multilevel logistic models that exhibit overdispersion," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 168(3), pages 599-613.
    11. Iversen, Tor & Luras, Hilde, 2000. "Economic motives and professional norms: the case of general medical practice," Journal of Economic Behavior & Organization, Elsevier, vol. 43(4), pages 447-470, December.
    12. Uri Gneezy & Aldo Rustichini, 2000. "Pay Enough or Don't Pay at All," The Quarterly Journal of Economics, Oxford University Press, vol. 115(3), pages 791-810.
    13. Avinash Dixit, 2002. "# Incentives and Organizations in the Public Sector: An Interpretative Review," Journal of Human Resources, University of Wisconsin Press, vol. 37(4), pages 696-727.
    14. Maria Goddard & Russell Mannion & Peter Smith, 2000. "Enhancing performance in health care: a theoretical perspective on agency and the role of information," Health Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 95-107.
    15. Lippi Bruni, Matteo & Nobilio, Lucia & Ugolini, Cristina, 2009. "Economic incentives in general practice: The impact of pay-for-participation and pay-for-compliance programs on diabetes care," Health Policy, Elsevier, vol. 90(2-3), pages 140-148, May.
    16. George France & Francesco Taroni & Andrea Donatini, 2005. "The Italian health-care system," Health Economics, John Wiley & Sons, Ltd., vol. 14(S1), pages 187-202.
    17. James J. Heckman & Jeffrey A. Smith & Christopher Taber, 1996. "What Do Bureaucrats Do? The Effects of Performance Standards and Bureaucratic Preferences on Acceptance into the JTPA Program," NBER Working Papers 5535, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Ammi, Mehdi & Fortier, Grant, 2017. "The influence of welfare systems on pay-for-performance programs for general practitioners: A critical review," Social Science & Medicine, Elsevier, vol. 178(C), pages 157-166.
    2. repec:wly:hlthec:v:26:y:2017:i::p:63-77 is not listed on IDEAS
    3. Dusheiko, Mark & Gravelle, Hugh & Martin, Stephen & Rice, Nigel & Smith, Peter C., 2011. "Does better disease management in primary care reduce hospital costs? Evidence from English primary care," Journal of Health Economics, Elsevier, vol. 30(5), pages 919-932.
    4. Fiorentini, Gianluca & Lippi Bruni, Matteo & Ugolini, Cristina, 2013. "GPs and hospital expenditures. Should we keep expenditure containment programs alive?," Social Science & Medicine, Elsevier, vol. 82(C), pages 10-20.
    5. Iezzi, Elisa & Lippi Bruni, Matteo & Ugolini, Cristina, 2014. "The role of GP's compensation schemes in diabetes care: Evidence from panel data," Journal of Health Economics, Elsevier, vol. 34(C), pages 104-120.
    6. Donatini A. & Fiorentini G. & Lippi Bruni M. & Mammi I. & Ugolini C., 2014. "Dealing with minor illnesses: the link between primary care characteristics and First Aid Clinics’ attendances," Working Papers wp925, Dipartimento Scienze Economiche, Universita' di Bologna.
    7. Visca, Modesta & Donatini, Andrea & Gini, Rosa & Federico, Bruno & Damiani, Gianfranco & Francesconi, Paolo & Grilli, Leonardo & Rampichini, Carla & Lapini, Gabriele & Zocchetti, Carlo & Di Stanislao,, 2013. "Group versus single handed primary care: A performance evaluation of the care delivered to chronic patients by Italian GPs," Health Policy, Elsevier, vol. 113(1), pages 188-198.
    8. Lippi Bruni, Matteo & Mammi, Irene & Ugolini, Cristina, 2016. "Does the extension of primary care practice opening hours reduce the use of emergency services?," Journal of Health Economics, Elsevier, vol. 50(C), pages 144-155.
    9. Mark Dusheiko & Hugh Gravelle & Stephen Martin & Nigel Rice & Peter C Smith, 2011. "Does Better Disease Management in Primary Care Reduce Hospital Costs?," Working Papers 065cherp, Centre for Health Economics, University of York.
    10. Matteo Lippi Bruni & Irene Mammi, 2017. "Spatial effects in hospital expenditures: A district level analysis," Health Economics, John Wiley & Sons, Ltd., vol. 26, pages 63-77, September.
    11. Ugolini, Cristina & Lippi Bruni, Matteo & Mammi, Irene & Donatini, Andrea & Fiorentini, Gianluca, 2016. "Dealing with minor illnesses: The link between primary care characteristics and Walk-in Centres’ attendances," Health Policy, Elsevier, vol. 120(1), pages 72-80.

    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bol:bodewp:660. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dipartimento Scienze Economiche, Universita' di Bologna). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.