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The Potential Role of Pay-for-Performance in Irish Health Care

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  • Nolan, Anne
  • O'Reilly, Jacqueline
  • Smith, Samantha
  • Brick, Aoife

Abstract

The current recession dictates that large decreases in public expenditure are required. As the second largest component of public expenditure, health is particularly vulnerable to the effects of the further cuts in expenditure that are required over the period 2012-2014. In the context of diminishing financial resources, there is increasing emphasis on maximising the value of expenditure by achieving efficient delivery of high-quality health-care services. In addition, the Irish health system is characterised by a complex set of financial incentives which have important implications for efficiency and equity. This paper examines international evidence on pay for performance (P4P) schemes to inform policymakers on the potential for implementing P4P in the Irish health-care system. In P4P, payments are tied to performance. P4P is becoming increasingly common in international health-care systems despite the lack of evidence on its effectiveness and a lack of consensus on how to design and implement such programmes. It is therefore important to understand the implications of existing P4P programmes before recommending their introduction in the Irish context. We provide an overview of the literature relating to large-scale P4P schemes, focusing on programmes that have been instituted by national public sector organisations. The literature highlights the poor quality of evidence on P4P schemes, stemming partly from technical challenges inherent in evaluating P4P schemes. Notwithstanding these technical difficulties, the available evidence does not provide a clear answer to the question of whether P4P should be implemented. Limitations include difficulties in obtaining valid performance indicators, unintended consequences, and the absence of evidence on cost effectiveness of P4P schemes. We assess how a P4P scheme would interact with the payment structures already in place in the Irish health-care system. We conclude that while there is an obvious need for greater efficiency and quality in the system, there are reasons why P4P initiatives are not recommended at this stage at least until the many complexities in provider reimbursement, public/private interaction, and patient access to the system are resolved.

Suggested Citation

  • Nolan, Anne & O'Reilly, Jacqueline & Smith, Samantha & Brick, Aoife, 2011. "The Potential Role of Pay-for-Performance in Irish Health Care," Papers EC4, Economic and Social Research Institute (ESRI).
  • Handle: RePEc:esr:wpaper:ec4
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    References listed on IDEAS

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    1. Hugh Gravelle & Matt Sutton & Ada Ma, 2010. "Doctor Behaviour under a Pay for Performance Contract: Treating, Cheating and Case Finding?," Economic Journal, Royal Economic Society, vol. 120(542), pages 129-156, February.
    2. Carol Propper & Deborah Wilson, 2003. "The Use and Usefulness of Performance Measures in the Public Sector," Oxford Review of Economic Policy, Oxford University Press, vol. 19(2), pages 250-267, Summer.
    3. Anthony Scott & Stefanie Schurer & Paul H. Jensen & Peter Sivey, 2009. "The effects of an incentive program on quality of care in diabetes management," Health Economics, John Wiley & Sons, Ltd., vol. 18(9), pages 1091-1108, September.
    4. Croxson, B. & Propper, C. & Perkins, A., 2001. "Do doctors respond to financial incentives? UK family doctors and the GP fundholder scheme," Journal of Public Economics, Elsevier, vol. 79(2), pages 375-398, February.
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    Cited by:

    1. Nolan, Anne, 2019. "Reforming the delivery of public dental services in Ireland: potential cost implications," Research Series, Economic and Social Research Institute (ESRI), number RS80, December.
    2. Aoife Brick & Anne Nolan & Jacqueline O’Reilly & Samantha Smith, 2012. "Conflicting Financial Incentives in the Irish Health-Care System," The Economic and Social Review, Economic and Social Studies, vol. 43(2), pages 273-301.
    3. 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.
    4. Hudson, Eibhlin & Nolan, Anne, 2015. "Public healthcare eligibility and the utilisation of GP services by older people in Ireland," The Journal of the Economics of Ageing, Elsevier, vol. 6(C), pages 24-43.

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    recession/Services/Health System/equity/cost;

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