Pay-for-performance reduces healthcare spending and improves quality of care: Analysis of target and non-target obstetrics and gynecology surgeries

In Korea, the Value Incentive Program (VIP) was first applied to selected clinical conditions in 2007 to evaluate the performance of medical institutes. We examined whether the condition-specific performance of the VIP resulted in measurable improvement in quality of care and in reduced medical costs. Population-based retrospective observational study. We used two data set including the results of quality assessment and hospitalization data from National Health Claim data from 2011 to 2014. Participants who were admitted to the hospital for obstetrics and gynecology were included. A total of 535 289 hospitalizations were included in our analysis. We used a generalized estimating equation (GEE) model to identify associations between the quality assessment and length of stay (LOS). A GEE model based on a gamma distribution was used to evaluate medical cost. The Poisson regression analysis was used to evaluate readmission. The outcome variables included LOS, medical costs and readmission within 30 days. Higher condition-specific performance by VIP participants was associated with shorter LOSs, decreases in medical cost, and lower within 30-day readmission rates for target and non-target surgeries. LOS and readmission within 30 days were different by change in quality assessment at each medical institute. Our findings contribute to the body of evidence used by policy-makers for expansion and development of the VIP. The study revealed the positive effects of quality assessment on quality of care. To reduce the between-institute quality gap, alternative strategies are needed for medical institutes that had low performance.