Money talks: Paying physicians for performance

Claudia Keser, Emmanuel Peterle () and Cornelius Schnitzler

No 173 [rev.], University of Göttingen Working Papers in Economics from University of Goettingen, Department of Economics

Abstract: Pay-for-performance attempts to tie physician payment to quality of care. In a controlled laboratory experiment, we investigate the effect of pay-for-performance on physician provision behavior and patient benefit. For that purpose, we compare a traditional fee-for-service payment system to a hybrid system that blends fee-for-service and pay-for-performance incentives. Physicians are found to respond to pay-for-performance incentives. Approximately 89 percent of the participants qualify for a pay-for-performance bonus payment in the experiment. It follows that a patient treated under the hybrid payment system is significantly more likely to receive optimal treatment than a similar fee-for-service patient. Pay-for-performance generally tends to alleviate over- and under-provision of medical treatment relative to fee-for-service. Irrespective of the payment system, we observe unethical treatment behavior, i.e., the provision of medical services with zero benefit to the patient.

Keywords: experimental economics; physician remuneration; pay-for-performance (P4P) (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-exp, nep-hea and nep-hrm
References: View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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