Physician Performance Pay: Experimental Evidence

81 Pages Posted: 22 Oct 2019

See all articles by Jeannette Brosig-Koch

Jeannette Brosig-Koch

University of Duisburg-Essen - Department of Economics and Business Administration

Heike Hennig‐Schmidt

University of Bonn - Laboratory for Experimental Economics

Nadja Kairies-Schwarz

University of Duisburg-Essen; University of Duisburg-Essen

Johanna Kokot

University of Hamburg; Hamburg Center for Health Economics

Daniel Wiesen

University of Cologne - Faculty of Management, Economics and Social Sciences

Date Written: October 10, 2019

Abstract

We present causal evidence on the effect of performance pay on health care provision, from a behavioral experiment with a representative sample of German primary care physicians. Randomly assigning physicians to two performance incentive levels, we analyze how performance pay, compared to capitation (within-subjects) and the bonus level (between-subjects), affects health care service provision and the quality of care. We find that performance pay reduces underprovision of care prevalent under capitation and enhances the quality of care. The effect increases with the patients’ severity of illness. Also, small incentives were effective in enhancing the quality of care. Linking behavioral data to physician register data indicates that physicians’ practice characteristics significantly relate health care choices in the experiment. Physicians in high-profit practices and practicing in cities are most responsive to incentives. Health policy implications are discussed.

Keywords: capitation, pay for performance, behavioral experiment, crowding-out, practice characteristics

JEL Classification: I11, C93

Suggested Citation

Brosig-Koch, Jeannette and Henning-Schmidt, Heike and Kairies-Schwarz, Nadja and Kokot, Johanna and Wiesen, Daniel, Physician Performance Pay: Experimental Evidence (October 10, 2019). Available at SSRN: https://ssrn.com/abstract=3467583 or http://dx.doi.org/10.2139/ssrn.3467583

Jeannette Brosig-Koch

University of Duisburg-Essen - Department of Economics and Business Administration ( email )

Universitätsstr. 9
Essen, 45141
Germany

Heike Henning-Schmidt

University of Bonn - Laboratory for Experimental Economics ( email )

Adenauerallee 24-42
Bonn, 53113
Germany

Nadja Kairies-Schwarz

University of Duisburg-Essen ( email )

Lotharstrasse 1
Duisburg, 47048
Germany

University of Duisburg-Essen ( email )

Lotharstrasse 1
Duisburg, 47048
Germany

Johanna Kokot

University of Hamburg ( email )

Esplanade 36
Hamburg, DE 20354
Germany

Hamburg Center for Health Economics ( email )

Esplanade 36
Hamburg, DE 20354
Germany

Daniel Wiesen (Contact Author)

University of Cologne - Faculty of Management, Economics and Social Sciences ( email )

Albertus-Magnus-Platz
Cologne, D-50923
Germany

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