Measuring the Effects of Pay for Performance Incentives on Primary Care Efficiency in the Military Health System

Nathaniel Drew Bastian, The Pennsylvania State University
Lawrence Van Fulton, Texas State University
Paul M. Griffin, The Pennsylvania State University

ABSTRACT
In this study, we use a retrospective, quasi-experimental, multiple time-series design to determine whether a P4P incentive program implemented by the U.S. Army improved efficiency at Army hospitals within the Military Health System (MHS). Secondary data were extracted from the MHS during the period of 2001 - 2012, which included measures for 23 Army, 12 Air Force, and 19 Navy hospitals. By comparing efficiency at Army hospitals pre- and post- P4P program implementation as well as with the Navy and Air Force hospitals (which do not have a P4P incentive program), we find that the Army's P4P incentive program did increase efficiency within the Army component of the MHS. Given the results of this study, we recommend that all military service branches consider adopting a P4P-like financial incentive program that rewards efficient use of resources. While the Army's system may not be the panacea, it is correlated with improved comparative efficiency.

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Updated 03/19/2014