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Health Econ. 2016 Jun;25(6):706-22. doi: 10.1002/hec.3330. Epub 2016 Mar 4.

The Impact of a Pay-for-Performance Scheme on Prescription Quality in Rural China.

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Center for Health Management and Policy (Key Laboratory of Health Economics and Policy, National Health and Family Planning Commission), Shandong University, Jinan, China.
China Center for Health Development Studies, Peking University, Beijing, China.
Blavatnik School of Government, University of Oxford, Oxford, UK.
Development Research Group, The World Bank, Washington, DC, USA.


In this prospective study, conducted in China where providers have traditionally been paid fee-for-service, and where drug spending is high and irrational drug prescribing common, township health centers in two counties were assigned to two groups: in one fee-for-service was replaced by a capitated global budget (CGB); in the other by a mix of CGB and pay-for-performance. In the latter, 20% of the CGB was withheld each quarter, with the amount returned depending on points deducted for failure to meet performance targets. Outcomes studied included indicators of rational drug prescribing and prescription cost. Impacts were assessed using differences-in-differences, because political interference led to non-random assignment across the two groups. The combination of capitated global budget and pay-for-performance reduced irrational prescribing substantially relative to capitated global budget but only in the county that started above the penalty targets. Endline rates were still appreciable, however, and no effects were found in either county on out-of-pocket spending.


fee-for-service; pay-for-performance; prescription quality; quality of medical care; rational prescribing

[Indexed for MEDLINE]

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