Abstract
The Quality and Outcomes Framework (QOF) is a Pay-for-Performance scheme introduced in England in 2004 to reward primary care providers. This incentive scheme provides financial incentives that reward the overall performance of a practice, not individual effort. Consequently, an important question is how the QOF may affect contractual choices, quality provision and doctor mobility in the primary healthcare labour market. The paper provides a simple theoretical model that shows that the introduction and further strengthening of the scheme may have induced practices to compete for the best doctors and modified their choices in terms of contractual agreements with practitioners. We test the implications of this model using a linkage between Doctors Census data and practices’ characteristics from 2003 to 2007. We use linear multilevel models with random intercept and we account for sample selection. We find that after the introduction of the QOF efficient doctors are more likely to become partners and mobility among doctors has increased. The strengthening of the scheme in 2005 is associated with an increase in the quality of primary care and a reduction in access to the market for new doctors.
Highlights
The number of General Practitioners (GPs) in the U.K. has risen by an average of 1.8% each year between 2004 and 2014, but there are still problems in recruiting and retaining GPs into the healthcare market (The Health Foundation [16])
The aim of this paper is to investigate the sorting and retention effects of the only P4P scheme for General Practitioners (GPs) in the U.K., the Quality and Outcomes Framework (QOF)
There is a lack of research on the sorting and retention effects that P4P may produce
Summary
The number of GPs in the U.K. has risen by an average of 1.8% each year between 2004 and 2014, but there are still problems in recruiting and retaining GPs into the healthcare market (The Health Foundation [16]). The rationale behind P4P is to tie workers’ compensation to their output aligning their individual objectives to those of the firm (see for example, Lazear [9]; Prendergast [13]; Ross [15]) If such schemes are introduced in multi-level organisations, there might be two potentially counteracting effects at play. The sorting effect might cause more able workers to select and stay in performance pay jobs and less able workers to leave these jobs (see for example, Dohmen and Falk [4]; Gielen et al [6]; Lazear [10]; 2000) According to these studies, in equilibrium workers relocate themselves on the basis of their ability, increasing productivity and wages in firms that use P4P schemes
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