![]() Dusheiko et al. ( 2011) reported a negative association between achievement of QOF incentivized care (including, but not limited to preventive care) and hospital costs. Harrison et al. ( 2014) found moderate and sustained reductions in emergency hospital admissions for some ambulatory care sensitive conditions for which preventive care was incentivized under the QOF. In the UK, several studies have investigated the impact of care incentivized through the quality and outcomes framework (QOF). ![]() Many of these have focused on care for chronic medical conditions. Previous research has investigated the association between the care incentivized under pay‐for‐performance schemes in primary care and changes in utilization in other healthcare settings, often without examining changes in primary care use or cost. The design of incentives and other measures to promote prevention by primary care physicians therefore requires information on the effect of prevention on primary care costs and on costs elsewhere in the healthcare system. ![]() An important-but largely unexplored-component of the incentive for primary care prevention is the extent to which the physician is the residual claimant for any cost savings resulting from their preventive activities (Meacock et al., 2014). Preventive activities could increase costs in primary care even while improving patient health and reducing costs in other healthcare sectors (e.g., Gupta et al., 2019). Participation in preventive activities by primary care physicians will depend on a number of behavioral factors, including their degree of altruism and intrinsic motivation (McGuire, 2000 Rebitzer & Taylor, 2011), their time preferences, the way in which they are paid (salary, capitation, fee for service, pay for performance) (Dahrouge et al., 2012 Iezzi et al., 2014 Town et al., 2005), and the impact of preventive activities on their remuneration. Preventive practices in primary care can be an effective means of improving patient health outcomes in various domains of health and can reduce future healthcare expenditure (Cornuz et al., 2006 Garrett et al., 2011 Park et al., 2013). This suggests that changes to the design of incentives to increase the marginal reward for conducting these preventive activities among patients with serious mental illness could have further increased welfare. ![]() These activities are incentivized in the English National Health Service but the total financial incentives for primary care physicians to participate were considerably smaller than the total cost savings produced. We estimate that there are large beneficial externalities for which the primary care physician is not the residual claimant: the cost savings in secondary care are 4.7 times larger than the cost savings in primary care. Using panel two‐part models to analyze patient‐level data linked across primary and secondary care, we find that these preventive activities in the previous year are associated with cost reductions in the current quarter both in primary and secondary care. We examine the impact of two preventive activities for people with serious mental illness (care plans and annual reviews of physical health) by English primary care practices on costs in these practices and in secondary care. A largely unexplored part of the financial incentive for physicians to participate in preventive care is the degree to which they are the residual claimant from any resulting cost savings. ![]()
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