Institutional Structure of Health Care in Rural Cameroun: Structural Estimation of Production in Teams with Unobservable Effort

Abstract

Traditional healers in Cameroun are paid on an outcome--contingent basis, where payments are linked to the recovery of the patient. On the other hand, organizational providers (government clinics and hospitals and church--based clinics and hospitals) are paid a fixed fee at the time of consultation. Is this 'custom' of payment method at the traditional healer a response to a problem of imperfect information in the supply of medical care? We fit a contractual model of health care demand to data on observed patterns of provider and contract choice using a Conditional Logit. Patients create an approximate market for medical effort by choosing between discrete contract types. Institutions and organizations play an essential role in the creation of credible quality. Governments can greatly reduce transaction costs (and increase net utility) by specifically recognizing their role as organizations within the context of the institution of modern health care.

JEL Classification: D8, I1, O2