Impact of Provider Payment Structure on Obstetric Interventions and Outcomes: A Difference-in-Differences Analysis

Traditionally, Canadian physicians provide care on a fee-for-service (FFS) basis; however, this model has been criticized as it incentivizes quantity of care over quality of care. Consequently, all Canadian provinces and territories have implemented some form of alternative payment plan. Evaluation of the impact of these policy changes, however, has typically focused on family physicians as opposed to specialists.

On January 1, 2004, obstetricians at the Medicine Hat Regional Hospital (MHRH) transitioned from FFS to salary. A difference-in-differences analysis was used to examine the impact of changes in obstetrician payment structure on the use of obstetric interventions and neonatal outcomes controlling for temporal trends at MHRH (intervention group) and the Chinook Regional Hospital (CRH; comparison group) from 2002 to 2005.

Between the pre-intervention period (2002-2003) and the post-intervention period (2004-2005), the rate of cesarean delivery increased significantly at both sites. Following adjustment for time of day, day of week, and antepartum risk score, the difference-in-difference estimator demonstrated a 5.8% (95% CI 1.5-10.0) increase in cesarean deliveries performed by obstetricians at MHRH compared with cesarean deliveries done at CRH after accounting for baseline differences and temporal trends. No significant differences were observed for family physicians. No significant differences were observed for other obstetric interventions or neonatal outcomes.

Under an FFS model, obstetricians are incentivized to cesarean delivery due to the increased reimbursement rate; however, the increase in cesarean deliveries at MHRH following the transition to a salary model was unexpected. This finding suggests that, in Canada, financial incentives are not a factor that explains the increasing rate of cesarean delivery.