Value of Combining Patient and Provider Incentives in Humanitarian Health Care Service Programs

Mili Mehrotra and Karthik V. Natarajan

Production and Operations Management, 2020, vol. 29, issue 3, 571-594

Abstract: The below‐par progress toward the Millennium Development Goals in many developing countries has been attributed to the low availability of good quality health care services and to the demand‐side barriers to access. In this study, we analyze an incentive design problem faced by a budget‐constrained humanitarian organization managing a health care service program (e.g., maternal health or HIV services) with different emphasis on the two measures of quality—structural and process. Incentives offered to the health care provider (referred to as supply‐side incentives) are aimed at improving the availability of good quality services and demand‐side incentives are used to encourage patients to seek care. In many developing country health programs, incentive schemes tend to be purely supply‐side focused or purely demand‐side focused. However, our results suggest that by offering the right combination of incentives to the patients and the provider, program performance can be increased up to 20 times, on average, depending on the service offered. Even within the current practice of using one‐sided incentives, there is significant scope for improvement (as much as 14 times, on average) by ensuring that there is better alignment between the incentive scheme and the service offered. In particular, pure supply‐side incentive schemes perform better than pure demand‐side incentive schemes in programs where there is a higher emphasis on structural quality. The opposite result holds true for programs that place a higher emphasis on process quality.

Date: 2020
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