The effect of pay for performance on income inequality between medical and non-medical staff

Human resources are the most important asset of any organization; also, the payment system is the main motivating factor for hospital staff. The aim of this study is to evaluate the effect of implementing pay for performance (P4P) instruction on inequality in income distribution between medical and non-medical staff.

The present study is a applied research study conducted through a descriptive method. The statistical population of the study, hospitals, and P4P were selected from Mashhad University of Medical Sciences, Iran. Data on personnel characteristics and their income were also collected for three periods including a six-month pre-implementation period, as well as two six-month post-implementation P4P periods. Meanwhile, we used Lorenz curve and Gini coefficient to measure inequality in the distribution of income.

The Gini coefficient obtained for all employees has increased from 63% for the period before the implementation of the instruction to 62% in the second period and 65% in the third period after the implementation of the instruction. The Gini coefficient between the physicians group and the nurses group for the first period was 64 and 35%; for the second period 61 and 25%; and for the third period 62 and 26%.

Results of this study are expected to be applied to reform current P4P policies in hospital. However, schemes that cause the service compensation change need to be examined from different dimensions; one of which is the impact on income inequality that requires more comprehensive studies.