Health economics
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Pay for performance (P4P) incentives for physicians are generally designed as additional payments that can be paired with any existing payment mechanism such as a salary, fee-for-services and capitation. However, the link between the physician response to performance incentives and the existing payment mechanisms is still not well understood. ⋯ We show that this result implies that the optimal size of P4P incentives vary negatively with the degree of supply-side cost-sharing. These results have important implications for the design of P4P programs and the cost of their implementation.