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Seminar: What is wrong with pay-for-performance initiatives? On the need for a broader and inclusive theoretical perspective

National Economics University

E-PhD Program Seminar Series


What is wrong with pay-for-performance initiatives? On the need for a broader and inclusive theoretical perspective


Ardeshir Sepehri

Professor, Department of Economics

Univerfsity of Manitoba, Canada


Time and Venue

Time: 2:00PM – 3:00PM

Date: Thursday, March 30th, 2023

Venue: Room 15.01, Building A1, National Economics University

207 Giai Phong Road, Hanoi, Vietnam




Despite the growing enthusiasm for, and adoption of pay-for-performance (P4P) as a means to align the incentives of healthcare providers with public health goals, the current evidence is too weak to draw general conclusions on their effectiveness. While some commentators have attributed P4P’s limited success to a weak program design and implementation, others have flagged flaws in P4P’s underlying conceptual framework and assumptions as more fundamental.

Pay incentives based on a narrowly focused set of services may divert the provider’s effort from the less accurately measured services towards the more accurately measured services, from unrewarded services towards the rewarded services, and from less lucrative rewarded services towards more lucrative reward services, making the impact of pay incentives on the level of each services ambiguous. Perhaps, more fundamental, the narrow and mechanistic reward-induced performance view of worker behavior strips away worker motivation of its goals, motives and values related to fulfillment and self-satisfaction and hence overlooking the perverse effects that pay incentive may have on worker’s intrinsic motivation. This commentary focuses on the later line of criticism, and argues that the motivation processes in work place is more complex than the simple intrinsic-extrinsic dichotomy suggested by the literature. Extrinsic motivation may take various distinct forms that can vary in degree in which they can be relatively controlled by external factors or that can be relatively self-regulated. These conceptual limitations point in the relevance of a broader perspective in the analysis of work motivation and its determinants.


Keywords: pay-for-performance, financial incentives, healthcare providers; worker motivation; unintended consequences


About presenter

Ardeshir Sepehri is Professor in the Department of Economics at University of Manitoba, Canada. He received a Ph.D. in Economics from the University of Alberta, Canada. His research interests lie in health care utilization and financing in developing countries. The overarching theme of his research examines the impact of Vietnam’s national health insurance system on out-of-pocket expenditures.


About series

This seminar series is part of the E-PhD Program at National Economics University. It targets PhD students, early-career researchers, and senior faculty who find interested in doing research in the areas of economics, business, management, and other inter-disciplinary fields of social science. The series is a platform for the wider research community to exchange ideas, networks and collaborations.


Contact details

Bach Ngoc Thang

Seminar series coordinator

Room 15.04, Building A1

Institute for Sustainable Development

National Economics University

207 Giai Phong Road, Hanoi, Vietnam

M: +84 35 443 1750

E:  bnthang@gmail.com, or thangbn@neu.edu.vn

W: http://isd.neu.edu.vn/