Dynamic impacts of performance based payment system on public hospitals in Turkey

Abstract

The goal of pay for performance (P4P) system in healthcare is to increase the efficiency of healthcare resources by paying physicians and hospitals for performance. Ministry of Health in Turkey has implemented P4P since 2004. The purpose of this study is to investigate the dynamic impacts of P4P on performance of hospitals and behaviors of physicians. The model includes physicians' interactions with patients, revenue pressures on physicians, and the resulting impacts on health outputs and quality. In order to increase productivity, physicians are induced to perform more medical activities. Physician, who experiences revenue pressure, may try to increase his/her revenue by performing more medical activities and give less importance to quality. Resulting inadequate treatments and wrong diagnosed patients would have negative effects on health quality. On the other hand, physicians who do not have any revenue concerns may give the quality of healthcare absolute priority, meanwhile undermining the productivity. This tendency may result in hospital crowding and high crowding pressures on physicians. Such conflicting pressures are included in model to investigate the impacts of P4P on health outputs in public hospitals. Results obtained concur with our dynamic hypotheses summarized above and agree with some of the general behaviors recently observed in Turkish healthcare.