Information or Compensation? Understanding the Role of Information Technology in Physician Response to Pay-For-Performance

Preventive health care services are often under-provided, due both to physician incentives and patient behavior regarding such services. We study the impact of physician financial incentives and physician use of information technology on preventive service take up using a unique proprietary data set from a large insurer that covers most of the population for the state of Hawaii. The data contain micro-level information on patient claims, physician financial incentives / payments, and physician logins to an IT platform designed to help them improve their use of preventive services. We leverage these data, together with exogenous variation in the financial incentives and adoption of IT to quantify the impact of these factors on physician preventive care utilization. We study how IT and financial incentives complement each other for this purpose, and use the micro-data to study physician heterogeneity in use of preventive care as a function of these factors. Finally, we study the relationship between patient cost-sharing incentives, physician use of IT, and physician financial incentives.