Physicians' incentives, patients' characteristics, and quality of care: A systematic experimental comparison of fee-for-service, capitation, and pay for performance

Jeannette Brosig-Koch, Mona Groß, Heike Hennig-Schmidt, Nadja Kairies-Schwarz and Daniel Wiesen

No 923, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen

Abstract: This paper systematically studies how performance pay, complementing either baseline feefor-service or capitation, affects physicians' medical service provision and the quality of care. Using a series of controlled experiments with physicians and students, we test the incentive effect of performance pay at a within-subject level. A discrete bonus is granted if a quality threshold is reached, which varies with the patients' severity of illness. We find that performance pay significantly reduces non-optimal service provision and enhances the quality of care. Effect sizes depend on the patients' severity of illness and whether the baseline is fee-for-service or capitation. Health policy implications, including a cost benefit analysis of introducing performance pay, are discussed.

Keywords: Fee-for-service; capitation; pay for performance; heterogeneous patients; artefactual field experiment; laboratory experiments (search for similar items in EconPapers)
JEL-codes: C91 I11 (search for similar items in EconPapers)
Date: 2021
New Economics Papers: this item is included in nep-exp, nep-hea, nep-hrm and nep-lma
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:923

DOI: 10.4419/96973079

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