How does the type of remuneration affect physician behaviour? Fixed salary versus fee-for-service

Kurt Brekke (), Tor Helge Holmäs (), Karin Monstad () and Odd Rune Straume
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Tor Helge Holmäs: Uni Research Rokkan Centre
Karin Monstad: Uni Research Rokkan Centre

No 09/2018, NIPE Working Papers from NIPE - Universidade do Minho

Abstract: We analyse the effects of two different types of physician remuneration - fee-for-service and fixed salary - on the treatment decisions of general practitioners (GPs) and on patients´ health outcomes. Using rich Norwegian register data during the period 2009-2013, we focus on GP locums working in a succession of temporary positions, which allows us to observe the same GPs working under different remuneration schemes within a relatively short period of time. We find that GPs respond strongly and consistently to changes in remuneration type. Compared with fixed salary, GP payment by fee-for-service leads to an increase in the supply of consultations and a higher provision of medical services (along several dimensions) per consultation. This has also signficant implications for patients´ health outcomes. The probability of experiencing an emergency admission to hospital shortly after a GP consultation is close to 20 percent lower if the GP is paid by fee-for-service instead of fixed salary. Overall, our analysis suggests that fixed-salary remuneration leads to underprovision of primary care.

Keywords: Physicians, Primary care; Fixed salary; Fee-for-service. (search for similar items in EconPapers)
JEL-codes: I11 I18 J33 (search for similar items in EconPapers)
Date: 2018
New Economics Papers: this item is included in nep-eur and nep-hea
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