The effect of performance-related pay of hospital doctors on hospital behaviour: a case study from Shandong, China
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BioMed Central
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The effect of performance-related pay of hospital doctors on hospital behaviour: a case study from Shandong, China Xingzhu Liu1 and Anne Mills*2 Address: 1Abt Associates Inc., Bethesda, Maryland, USA and 2Health Economics and Financing Programme, London School of Hygiene and Tropical Medicine, London, UK Email: Xingzhu Liu - [email protected]; Anne Mills* - [email protected] * Corresponding author
Published: 27 October 2005 Human Resources for Health 2005, 3:11
doi:10.1186/1478-4491-3-11
Received: 17 May 2005 Accepted: 27 October 2005
This article is available from: http://www.human-resources-health.com/content/3/1/11 © 2005 Liu and Mills; licensee BioMed Central Ltd. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/2.0), which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Abstract Background: With the recognition that public hospitals are often productively inefficient, reforms have taken place worldwide to increase their administrative autonomy and financial responsibility. Reforms in China have been some of the most radical: the government budget for public hospitals was fixed, and hospitals had to rely on charges to fill their financing gap. Accompanying these changes was the widespread introduction of performance-related pay for hospital doctors – termed the "bonus" system. While the policy objective was to improve productivity and cost recovery, it is likely that the incentive to increase the quantity of care provided would operate regardless of whether the care was medically necessary. Methods: The primary concerns of this study were to assess the effects of the bonus system on hospital revenue, cost recovery and productivity, and to explore whether various forms of bonus pay were associated with the provision of unnecessary care. The study drew on longitudinal data on revenue and productivity from six panel hospitals, and a detailed record review of 2303 tracer disease patients (1161 appendicitis patients and 1142 pneumonia patients) was used to identify unnecessary care. Results: The study found that bonus system change over time contributed significantly to the increase in hospital service revenue and hospital cost recovery. There was an increase in unnecessary care and in the probability of admission when the bonus system switched from one with a weaker incentive to increase services to one with a stronger incentive, suggesting that improvement in the financial health of public hospitals was achieved at least in part through the provision of more unnecessary care and drugs and through admitting more patients. Conclusion: There was little evidence that the performance-related pay system as designed by the sample of Chinese public hospitals was socially desirable. Hospitals should be monitored more closely by the government, and regulations applied to limit opportunistic behaviour. Otherw
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