Imperfect Performance

Abstract

Within the complex context of the Dutch health care system, the Ministry of Health introduced a policy that shows parallels with pay-for-performance (P4P). It enabled hospital boards to differentiate between physicians’ individual wages. This study addresses the following question: What effects did this P4P instrument have on the relationship between hospital boards and physicians? We conclude that it had no positive effects on the relationship but did put it under a considerable degree of stress. Furthermore, its introduction - isolated to the market sphere only - lacked alignment with other spheres, designated as a “value gap.” This study adds empirical findings that P4P leads to inappropriate behavior and should be accompanied by proper side policies.