Input-based versus Output-based Incentive Contracts in Health Care: Experimental

Evidence from in India

Manoj Mohanan. Grant Miller, Katherine Donato, Yulya Truskinovsky

BMGF-Duke Workshop on Quality of CareJune 29-30, Neemrana, Indiahttp://sites.duke.edu/healthqualityworkshop/

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Thanks to our funders• 3ie and DFID-India for funding the overall study and the data

collection (Grant no. OW2:205)• World Bank HRITF (Grant no. TF099435)• Government of Karnataka / KHSDRP 6/

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Introduction• Performance incentives have long been used to correct a

range of principal-agent problems (Hall and Liebman, 1998; Lazear 2000;

Rosenthal et al. 2004)• Central question in design of performance incentives is

whether to rewards inputs into production or to rewards outputs directly

• Theory (simplified prediction): • Input based contracts if principals have complete information

about which inputs are most productive and these inputs can be observed and verified

• If outputs are better observed and verified, and better to delegate decision to agent, use output based contract

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3While these predictions are clear(er) at extremes, theory has ambiguous predictions for what happens in the (vast) middle.Also, issues of risk-incentive trade off leading to costly contracts

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Performance incentives in healthcare• Pay for Performance (P4P) has become very popular in recent

years (UK, US, Rwanda, Burundi, India, Argentina, China …..)• Developing countries - poor quality of care know-do gap

suggesting low effort• Evidence on impact of P4P remains mixed • Most programs pay for inputs (volume of health care and

types of services), even though there is little evidence about relative merits of paying for inputs or outputs.

• Very few studies directly reward outputs (Miller et al in China and Singh in India)

• Hence this study …. We experimentally compare performance of providers and behavioral responses to input and output based contracts

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Snapshot of findings• Effect on health outcomes

• We find that providers in the input incentive group achieved post-partum hemorrhage (PPH) rates that were nearly 10 percentage points lower than the control group mean, a 28% decrease

• No reduction in output group or Other outcomes • HOW: Input group providers did more uterine massage and

oxytocic drugs to prevent PPH more frequently relative to control and output arm

• Effect on inputs• Increases on post natal maternity care (mainly counseling new

mothers) in both groups• Why inputs did better: likely because of riskiness &

observability • Results not driven by selection.• Work in Progress!!

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Brief context• Karnataka – 8th largest state in India, ~ 53M popn.• Maternal mortality 144

• 178 India, 240 Bangladesh, 21 US• Infant mortality 31

• 40 India, 45 Bangladesh, 6.7 US• Large, growing Pub-Pvt-Partnership focus

• 80% of H. care is delivered by private sector• CY program in Gujarat (Mohanan et al 2014)• TBY program in KN• Contracts w pvt providers • Opportunity to imprve

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The study• Randomized Controlled Experiment w 3 arms with 150 eligible

Pvt. Sector Providers (rural areas below level of taluk (subdist)• Contracts such that providers had the opportunity to earn ~

$2700 per year (~15% of a midlevel govt dr’s salary)• Input based contract:

• Adherence to 2009 WHO / GoI guidelines for basic obstetric care Five domains: (A) Pregnancy Care, (B) Childbirth Care, (C) Postnatal Maternal Care, (D) Newborn Care, and (E) Postnatal Newborn Care

• Output based contract:• Incentives based on the incidence of four adverse MNCH outcomes

patients: (1) post-partum hemorrhage (PPH), (2) pre-eclampsia, (3) sepsis, and (4) neonatal mortality. Also received guidelines

• Control arm contract: • No incentives, ONLY guidelines, but sign contract and all visits.

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12084 mothers including

2941 patients

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PPH Performance by Treatment Group

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Postnatal Maternal Care Performance by Treatment Group

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Behavioral Mechanisms• Subjective expectations about likelihood of the four outcomes

improving prior to offering the incentive contracts.• 74% of providers said PPH was most important (only 8% for NMR) • Over 32% said NMR was the least likely outcome to improve. 6/

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PPH Most

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Sepsis

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PPH Least

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Sepsis

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InputsOutputsControl

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Qualitative Insights• Output providers did not know about patient outcomes • Input providers felt they were not rewarded enough • Provider recall of contract details was poor (in spite of all of

the visits and interviews!)• Providers attribute outcomes to patient behavior / awareness,

and said this is the main challenge in improving outcomes

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Main Conclusions• Input based providers performed significantly better, reducing

PPH by 28% relative to control (10 %point improvement)• No effect among output or on other outcomes.• Some evidence of better adherence to guidelines especially

those relevant to PPH• Providers had ex-ante beliefs on PPH being a lot more

important• Output providers do not observe outcomes. Output contracts

appear to be more risky. • Work in progress!!

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Thank you!

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Inputs and outputs

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Input1:Preg Care

(ANC)

Input2:ChBirth

Care

Input3:PN

Matern. Care

Input4:Newborn

Care

Input5:PN

Newbrn Care

Output1 (PPH) X X

Output2 (Pre-

Eclmp)X

Output3 (Sepsis) X X

Output4 (Neo. Mort)

X X X

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The contract(s)• Example of Input contracts

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Information (to all 3 arms)• WHO Guidelines

on best practices

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Data• Baseline data – provider listing across the state, provider

survey data, & household data (discarded due to quality concerns)• Implications for deviation from original (2009-10) design

• Data from providers on ex-ante expectations and immediately after contract

• Data from providers on strategies they planned (2 months after contract)

• Data from providers on patient list• Household data collection • Qualitative Data

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Analysis• Pre-analysis plan published in early 2014 (AEA RCT registry)• Specified all key hypotheses, mechanisms, as well as multiple

outcomes corrections.• test for effect of contract type on outcomes (health or inputs)

as a function of treatment, provider characteristics, district FE, household / mother characteristics.

• Multiple outcomes for key hypothesis• Report standard p values as well as those from Anderson index

for inter-related inputs (example inputs during time of delivery)• Multiple comparisons – control for family-wise error rate control

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Example of analyses specified

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