TY - JOUR
T1 - Payment systems in the healthcare industry
T2 - An experimental study of physician incentives
AU - Green, Ellen
N1 - Funding Information:
I would especially like to thank Sheryl Ball and Adrienne Lucas for their useful comments and suggestions. I am also grateful to Landis Atkinson, Kristen Capogrossi, Ben Congleton, Pamela Cubberly, Ryan Donnelly, Saul Hoffman, Russell Osborne, Roger Congleton and seminar participants at the American Economic Association annual conference, Southern Economic Association annual meeting, Society for Medical Decision Making annual meeting, and International Economic Science Association conference for helpful comments. Support from the Institute for Advanced Study and the Making A Difference Scholarship at Virginia Tech is gratefully acknowledged. All errors are my own.
Publisher Copyright:
© 2014 Elsevier B.V.
PY - 2014/10/1
Y1 - 2014/10/1
N2 - Policy makers and the healthcare industry have proposed changes to physician payment structures as a way to improve the quality of health care and reduce costs. Several of these proposals require healthcare providers to employ a value-based purchasing program (also known as pay-for-performance [P4P]). However, the way in which existing payment structures impact physician behavior is unclear and therefore, predicting how well P4P will perform is difficult. To understand the impact physician payment structures have on physician behavior, I approximate the physician-patient relationship in a real-effort laboratory experiment. I study several prominent physician payment structures including fee-for-service, capitation, salary, and P4P. I find that physicians are intrinsically motivated to provide high quality care and relying exclusively on extrinsic incentives to motivate physicians is detrimental to the quality of care and costly for the healthcare industry.
AB - Policy makers and the healthcare industry have proposed changes to physician payment structures as a way to improve the quality of health care and reduce costs. Several of these proposals require healthcare providers to employ a value-based purchasing program (also known as pay-for-performance [P4P]). However, the way in which existing payment structures impact physician behavior is unclear and therefore, predicting how well P4P will perform is difficult. To understand the impact physician payment structures have on physician behavior, I approximate the physician-patient relationship in a real-effort laboratory experiment. I study several prominent physician payment structures including fee-for-service, capitation, salary, and P4P. I find that physicians are intrinsically motivated to provide high quality care and relying exclusively on extrinsic incentives to motivate physicians is detrimental to the quality of care and costly for the healthcare industry.
KW - Capitation
KW - Fee-for-service
KW - Laboratory experiment
KW - Pay-for-performance
KW - Physician payment system
KW - Salary
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U2 - 10.1016/j.jebo.2014.05.009
DO - 10.1016/j.jebo.2014.05.009
M3 - Article
AN - SCOPUS:84907155069
SN - 0167-2681
VL - 106
SP - 367
EP - 378
JO - Journal of Economic Behavior and Organization
JF - Journal of Economic Behavior and Organization
ER -