TY - CHAP
T1 - Non-Financial Performance Measures in the Healthcare Industry
T2 - Do Quality-Based Incentives Matter?
AU - Evans, John H.
AU - Leone, Andrew
AU - Nagarajan, Nandu J.
N1 - Funding Information:
We thank two anonymous reviewers and the editor for helpful comments and suggestions. Financial support from the Center for Research on Contracts and the Structure of Enterprise, Katz Graduate School of Business, University of Pittsburgh and from the Richard D. Irwin Foundation is gratefully acknowledged.
PY - 2005
Y1 - 2005
N2 - This study examines the economic consequences of non-financial measures of performance in contracts between health maintenance organizations (HMOs) and primary care physicians (PCPs). HMOs have expanded contractual arrangements to give physicians not only financial incentives to control costs, but also to make the physicians accountable for the quality of patient care. Specifically, we examine how quality provisions in HMO-PCP contracts affect utilization (patient length of stay in the hospital), patient satisfaction, and HMO costs. Our results show that quality clauses are associated with a statistically significant increase in utilization (29 more hospital days annually per 1,000 HMO enrollees). Further, inclusion of quality clauses in PCP contracts also led to a significant increase in patient satisfaction, but no associated increase in HMO costs. Overall, these results suggest that quality clauses in PCP contracts can increase value by increasing customer satisfaction without significantly increasing cost.
AB - This study examines the economic consequences of non-financial measures of performance in contracts between health maintenance organizations (HMOs) and primary care physicians (PCPs). HMOs have expanded contractual arrangements to give physicians not only financial incentives to control costs, but also to make the physicians accountable for the quality of patient care. Specifically, we examine how quality provisions in HMO-PCP contracts affect utilization (patient length of stay in the hospital), patient satisfaction, and HMO costs. Our results show that quality clauses are associated with a statistically significant increase in utilization (29 more hospital days annually per 1,000 HMO enrollees). Further, inclusion of quality clauses in PCP contracts also led to a significant increase in patient satisfaction, but no associated increase in HMO costs. Overall, these results suggest that quality clauses in PCP contracts can increase value by increasing customer satisfaction without significantly increasing cost.
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U2 - 10.1016/S1474-7871(05)14001-5
DO - 10.1016/S1474-7871(05)14001-5
M3 - Chapter
AN - SCOPUS:33645930655
SN - 0762312432
SN - 9780762312436
T3 - Advances in Management Accounting
SP - 1
EP - 31
BT - Advances in Management Accounting
A2 - Epstein, Marc
A2 - Lee, John
ER -