How Do Doctors Respond to Incentives? Unintended Consequences of Paying Doctors to Reduce Costs

Diane Alexander

Journal of Political Economy, 2020, vol. 128, issue 11, 4046 - 4096

Abstract: Billions of dollars have been spent on pilot programs searching for ways to reduce health care costs. I study one such program, in which hospitals pay doctors bonuses for reducing the total hospital costs of admitted Medicare patients. Doctors respond to the bonuses by becoming more likely to admit patients whose treatment can generate high bonuses and sorting healthier patients into participating hospitals. Conditional on patient health, however, doctors do not reduce costs or change procedure use. These results highlight the ability of doctors to game incentive schemes and the risks of basing nationwide health care reforms on pilot programs.

Date: 2020
References: Add references at CitEc
Citations: View citations in EconPapers (20)

Downloads: (external link)
http://dx.doi.org/10.1086/710334 (application/pdf)
http://dx.doi.org/10.1086/710334 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: How do Doctors Respond to Incentives? Unintended Consequences of Paying Doctors to Reduce Costs (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpolec:doi:10.1086/710334

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().