Money Talks - Paying Physicians for Performance

Revised Version, Cege Discussion Paper Number 173

47 Pages Posted: 20 Nov 2013 Last revised: 24 Nov 2014

See all articles by Claudia Keser

Claudia Keser

University of Goettingen (Gottingen)

Emmanuel Peterle

Université de Rennes 1

Cornelius Schnitzler

University of Goettingen (Gottingen)

Date Written: October 1, 2014

Abstract

Pay‐for‐performance has been enjoying a growing popularity among healthcare policy makers. It attempts to tie physician payment to quality of care. In a controlled laboratory experiment, we investigate the effect of pay‐for-performance on physician provision behavior and patient benefit. For that purpose, we compare two payment systems, a traditional fee‐for‐service payment system and a hybrid payment system that blends fee‐for‐service and pay‐for‐performance incentives. Physicians are found to respond to pay‐for‐performance incentives. Approximately 89 percent of the participants qualify for a pay‐for‐performance bonus payment in the experiment. The physicians’ relative share of optimal treatment decisions is significantly larger under the hybrid payment system than under fee‐for‐service. A patient treated under the hybrid payment system is significantly more likely to receive optimal treatment than a fee‐for‐service patient of matching type and illness. Pay‐for‐performance in many cases alleviates over‐ and under‐provision behavior relative to fee‐for‐service. We observe unethical treatment behavior (i.e., the provision of medical services with no benefit to the patient), irrespective of the payment system.

Keywords: Experimental economics; physician remuneration; pay‐for‐performance (P4P)

Suggested Citation

Keser, Claudia and Peterle, Emmanuel and Schnitzler, Cornelius, Money Talks - Paying Physicians for Performance (October 1, 2014). Revised Version, Cege Discussion Paper Number 173, Available at SSRN: https://ssrn.com/abstract=2357326 or http://dx.doi.org/10.2139/ssrn.2357326

Claudia Keser (Contact Author)

University of Goettingen (Gottingen) ( email )

Platz der Göttinger Sieben 3
Göttingen, 37073
Germany

Emmanuel Peterle

Université de Rennes 1 ( email )

11 Rue Jean Macé
Rennes, Rennes 35700
France

Cornelius Schnitzler

University of Goettingen (Gottingen) ( email )

Platz der Göttinger Sieben 3
Göttingen, 37073
Germany

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
184
Abstract Views
1,025
rank
191,625
PlumX Metrics