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Pay-for-Performance, Reputation, and the Reduction of Costly Overprovision

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  • Nadja Kairies

    (University of Duisburg-Essen)

Abstract

We investigate the effect of reputational motivation on output in a scenario of overprovision of medical treatment. We assume that physicians differ in their degree of altruism, enjoy being perceived as good but, dislike being perceived as greedy. We show that better reputational motivation unambiguously reduces the costs of healthcare provision and the magnitude of overprovision which in turn raises patient benefits.

Suggested Citation

  • Nadja Kairies, 2015. "Pay-for-Performance, Reputation, and the Reduction of Costly Overprovision," Economics Bulletin, AccessEcon, vol. 35(1), pages 702-715.
    • Handle: RePEc:ebl:ecbull:eb-15-00170
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    References listed on IDEAS

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    1. repec:zbw:rwirep:0414 is not listed on IDEAS
    2. Kairies, Nadja & Krieger, Miriam, 2013. "How do Non-Monetary Performance Incentives for Physicians Affect the Quality of Medical Care? – A Laboratory Experiment," Ruhr Economic Papers 414, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Mark McClellan, 2011. "Reforming Payments to Healthcare Providers: The Key to Slowing Healthcare Cost Growth While Improving Quality?," Journal of Economic Perspectives, American Economic Association, vol. 25(2), pages 69-92, Spring.
    4. Le Grand, Julian, 2003. "Motivation, Agency, and Public Policy: Of Knights and Knaves, Pawns and Queens," OUP Catalogue, Oxford University Press, number 9780199266999, Decembrie.
    5. Eggleston, Karen, 2005. "Multitasking and mixed systems for provider payment," Journal of Health Economics, Elsevier, vol. 24(1), pages 211-223, January.
    6. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
    7. Jonathan T. Kolstad, 2013. "Information and Quality When Motivation Is Intrinsic: Evidence from Surgeon Report Cards," American Economic Review, American Economic Association, vol. 103(7), pages 2875-2910, December.
    8. Chalkley, Martin & Khalil, Fahad, 2005. "Third party purchasing of health services: Patient choice and agency," Journal of Health Economics, Elsevier, vol. 24(6), pages 1132-1153, November.
    9. Jonathan T. Kolstad, 2013. "Information and Quality when Motivation is Intrinsic: Evidence from Surgeon Report Cards," NBER Working Papers 18804, National Bureau of Economic Research, Inc.
    10. Siciliani, Luigi, 2009. "Paying for performance and motivation crowding out," Economics Letters, Elsevier, vol. 103(2), pages 68-71, May.
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    More about this item

    Keywords

    altruism; performance; motivation; reputation;
    All these keywords.

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • I0 - Health, Education, and Welfare - - General

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