Physician performance pay: Evidence from a laboratory experiment

Jeannette Brosig-Koch, Heike Hennig-Schmidt, Nadja Kairies-Schwarz and Daniel Wiesen ()

No 658, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: We present causal evidence from a controlled experiment on the effect of pay for performance on physicians' behavior and patients' health benefits. At a within-subject level, we introduce performance pay to complement either fee-for-service or capitation. Performance pay is granted if a health care quality threshold is reached, and varies with the patients' severity of illness. We find that performance pay significantly reduces overprovision of medical services due to fee-for-service incentives, and underprovision due to capitation; on average, it increases the patients' health benefit. The magnitude of these effects depends, however, on the patients' characteristics. We also find evidence for a crowding-out of patient-regarding behavior due to performance pay. Health policy implications are discussed.

Keywords: Fee-for-service; capitation; pay for performance; laboratory experiment; crowding-out (search for similar items in EconPapers)
JEL-codes: C91 I11 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-exp, nep-hea and nep-hrm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:658

DOI: 10.4419/86788764

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