• Matt Sutton, Ross Elder, Bruce Guthrie, and Graham Watt.
• Health Economics, Health Methodology Research Group, University of Manchester, Manchester M13 9PL, UK. matt.sutton@manchester.ac.uk
• Health Econ. 2010 Jan 1;19(1):1-13.

AbstractFinancial incentives may increase performance on targeted activities and have unintended consequences for untargeted activities. An innovative pay-for-performance scheme was introduced for UK general practices in 2004. It incentivised particular quality indicators for targeted groups of patients. We estimate the intended and unintended consequences of this Quality and Outcomes Framework (QOF) using dynamic panel probit models estimated on individual patient records from 315 general practices over the period 2000/1-2005/6. We focus on annual rates of recording of blood pressure, smoking status, cholesterol, body mass index and alcohol consumption. The recording of each risk factor is designated as incentivised or unincentivised for each individual based on whether they have one of the diseases targeted by the QOF. The effect on incentivised factors was substantially larger on the targeted patient groups (+19.9 percentage points) than on the untargeted groups (+5.3 percentage points). There was no obvious evidence of effort diversion but there was evidence of substantial positive spillovers (+10.9 percentage points) onto unincentivised factors for the targeted groups. Moreover, provider responses were larger on those indicators for which more stringent standards were set and greater rewards offered. We conclude that the incentives induced providers to improve targeted quality and make investments in quality that extended beyond the scheme. We estimate that the average provider was paid pound20 500 for recording 410 additional items of information on the risk factors targeted by the financial incentives. Allowance for the positive spillovers reduces the estimated average reward from pound50 to pound25 per additional record.

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