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Different Strokes for Different Folks: Experimental Evidence on the Effectiveness of Input and Output Incentive Contracts for Health Care Providers with Different Levels of Skills

90 Pages Posted: 3 May 2017  

Manoj Mohanan

Duke University - Sanford School of Public Policy; Duke University - Department of Economics

Grant Miller

Stanford University - School of Medicine; National Bureau of Economic Research (NBER)

Katherine Donato

Harvard University

Yulya Truskinovsky

Harvard University - T.H. Chan School of Public Health

Marcos Vera-Hernandez

University College London; Institute for Fiscal Studies (IFS)

Date Written: May 2, 2017

Abstract

A central issue in designing performance incentive contracts is whether to reward the production of outputs versus use of inputs: the former rewards efficiency and innovation in production, while the latter imposes less risk on agents. Agents with varying levels of skill may perform better under different contractual bases as well – more skilled workers may be better able to innovate, for example. We study these issues empirically through an experiment enabling us to observe and verify outputs (health outcomes) and inputs (guideline adherence) in Indian maternity care. We find that both output and input incentive contracts achieved comparable reductions in post-partum hemorrhage (PPH) rates, the dimension of maternity care most sensitive to provider behavior and the largest cause of maternal mortality. Interestingly, and in line with the theory, providers with advanced qualifications performed better and used new health delivery strategies under output incentives, while providers with and without advanced qualifications performed equally under input incentives.

JEL Classification: D86, J41, O15

Suggested Citation

Mohanan, Manoj and Miller, Grant and Donato, Katherine and Truskinovsky, Yulya and Vera-Hernandez, Marcos, Different Strokes for Different Folks: Experimental Evidence on the Effectiveness of Input and Output Incentive Contracts for Health Care Providers with Different Levels of Skills (May 2, 2017). Economic Research Initiatives at Duke (ERID) Working Paper No. 245. Available at SSRN: https://ssrn.com/abstract=2961957 or http://dx.doi.org/10.2139/ssrn.2961957

Manoj Mohanan (Contact Author)

Duke University - Sanford School of Public Policy ( email )

201 Science Drive
Box 90312
Durham, NC 27708-0239
United States

Duke University - Department of Economics ( email )

213 Social Sciences Building
Box 90097
Durham, NC 27708-0204
United States

Grant Miller

Stanford University - School of Medicine ( email )

Stanford, CA 94305
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Katherine Donato

Harvard University ( email )

1875 Cambridge Street
Cambridge, MA 02138
United States

Yulya Truskinovsky

Harvard University - T.H. Chan School of Public Health ( email )

677 Huntington Avenue
Boston, MA 02115
United States

Marcos Vera-Hernandez

University College London ( email )

Economics Dept.
Gower Street
London, WC1E 6BT
United Kingdom
+442076791007 (Phone)

HOME PAGE: http://www.homepages.ucl.ac.uk/~uctpamv

Institute for Fiscal Studies (IFS) ( email )

7 Ridgmount Street
London, WC1E 7AE
United Kingdom

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