This study assessing the relationship of medical group performance-based financial incentives and individual physician performance improvement on patient care experience measures has several important findings relevant to the design and implementation of pay-for-performance programs. First, performance on the physician communication, care coordination, and office staff interactions composite measures have significantly improved since the inception of California’s pay-for-performance program in 2004. The magnitude of annual improvement on the physician communication and care coordination composites is associated with a 10.8 and 6.7 annual percentile point increase, respectively, for a physician at the 50th percentile at baseline. Many stakeholders would consider a 5–10 point improvement in a physician’s percentile rank over one year as a practically meaningful change. Moreover, previous research assessing the effect of communication interventions on improvements on patients’ experiences measures35
suggests that the observed changes in physician communication are clinically meaningful. Our findings underscore that even with fairly tight performance distributions commonly found for patient satisfaction and experience measures36
, significant improvement is possible.
The improvement is also noteworthy because previous analyses have found substantial declines in physician-patient relationship quality over time. For example, in the late 1990s, before the Institute of Medicine called attention to the importance of patient-centered care37
, there were no statewide or other large-scale efforts to measure patient care experiences. At this time, primary care performance reporting and incentives focused entirely on clinical quality measures, and substantial improvement was observed38–40
. Patients’ experiences of primary care, however, deteriorated in both commercially insured adult and Medicare-insured elderly patient populations41,42
. The improvements in primary care patients’ experiences observed in this study are a marked contrast to those earlier trends, and may be owed, in part, to the heightened salience of patient-centered care nationally during that period and the specific measurement and accountability activities related to patient care experiences in California. Our results were fairly robust to many sensitivity tests assessing alternative explanations, including small patient sample sizes for some physicians, physicians with fewer years of participation, and panel maturation. Future research should clarify the extent to which observed improvements stem from secular trends, performance-based financial incentives and other improvement activities.
Consistent with evidence assessing the effects of pay-for-performance programs on the technical quality of care11
, our slope-intercept correlation results indicate that physicians with lower baseline patient survey scores were more likely to improve performance compared to physicians with higher scores at baseline even with random effects controlling for regression to the mean. This suggests that targeting patient experience improvement activities at individual physician practices with lower baseline performance may result in the most cost-effective use of resources. Medical groups and health plans, however, might want to foster a quality culture by making improvement activities broadly available to all physician practices. For example, including high performing practices in improvement activities may facilitate organizational learning43
Finally, we found that the criteria used in individual physicians’ financial incentive formula were associated with changes over time on most composite measures. Specifically, greater emphases on clinical quality and patient experience performance and fewer emphases on productivity and efficiency criteria were associated with larger improvements. Our results are consistent with evidence that strong use of productivity incentives may result in unintended consequences, including physician44
dissatisfaction. Productivity incentives might not effectively cultivate the working relationships of physicians, advanced practice clinicians, and office staff46
, and a weak relationship emphasis may spill over to patient care. In addition to clarifying the precise mechanisms by which medical group financial incentive characteristics affect performance on patient experience measures, other organizational influences, including group culture47
, should be examined in larger samples of medical groups.
Our findings should be considered in light of important limitations. First, while detailed information about the magnitude and nature of financial incentives directed at individual physicians was analyzed, we could not account for secular trends in performance improvement analytically because a control group was not available. However, the study is the first to find large-scale improvements in patients’ experiences of primary care over time, suggesting that the public reporting and/or financial incentive program may have induced improvement. Second, response rates across years were modest, and information about non-respondents was not available. As a result, it is not possible to assess the extent to which differential patient non-response by physician may affect the reliable measurement of physician performance. Previous analyses indicate that the nature
of non-response on the patient survey measures does not differ significantly across physicians and that differences in the extent
of non-response across physicians are too small to meaningfully affect overall results24
. Consequently, non-response seems unlikely to threaten the integrity of the physician-level analyses presented. Third, although the study’s physician sample is large, our results might not generalize to other states with different demographic distributions or market conditions. However, the medical groups studied are a mix of integrated, salaried practices and independent practice associations and are likely representative of groups that are actively engaged in performance improvement. Finally, we did not assess physician influences on performance change over time. Individual physicians account for the largest proportion of explainable variation on ambulatory care experience measures24,48
, so physician factors are likely to explain performance change on patient experience measures. For example, data on physician characteristics and attitudes concerning public reporting and pay-for-performance implementation49
might explain performance improvement.
In conclusion, our study, the first to assess the relationship between the use of performance-based financial incentives and changes in patients’ experiences over time in the US21
, suggests public reporting and pay-for-performance can potentially improve physician communication, access to care, and office staff interactions as experienced and reported by patients. In the context of statewide measurement, reporting, and performance-based financial incentives, patient care experiences significantly improved. The study is the first to document large-scale improvements in patient care experiences over time41,42
. The magnitude and nature of financial incentives directed at individual physicians explained a significant proportion of the observed improvements, indicating that the incentives used by groups or unmeasured characteristics of medical groups associated with the use of incentives, e.g., group culture, account for changes in physician performance on patient experience measures over time. In order to promote patient-centered care in pay-for-performance and public reporting programs, the mechanisms by which program features affect performance improvement should be clarified.