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How sensitive is physician performance to alternative compensation schedules? Evidence from a large network of primary care clinics

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  • Lorens A. Helmchen
  • Anthony T. Lo Sasso

Abstract

Despite its centrality for the provision of health care, physician compensation remains understudied, and existing studies either fail to control for time trends, cover small samples from highly particular settings, or examine empirically negligible changes in reward levels. Using a four-year sample of 59 physicians and 1.1 million encounters, we study how physicians at a network of primary care clinics responded when their salaried compensation plan was replaced with a lower salary plus substantial piece rates for encounters and select procedures. Although patient characteristics remained unchanged, physicians increased encounters by 11 to 61%, both by increasing encounters per day and days worked at the network, and increased procedures to the maximum reimbursable level. Copyright © 2009 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/hec.1551
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Bibliographic Info

Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

Volume (Year): 19 (2010)
Issue (Month): 11 ()
Pages: 1300-1317

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Handle: RePEc:wly:hlthec:v:19:y:2010:i:11:p:1300-1317

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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  1. Frank, Richard G. & Zeckhauser, Richard J., 2007. "Custom-made versus ready-to-wear treatments: Behavioral propensities in physicians' choices," Journal of Health Economics, Elsevier, vol. 26(6), pages 1101-1127, December.
  2. Glied, Sherry & Zivin, Joshua Graff, 2002. "How do doctors behave when some (but not all) of their patients are in managed care?," Journal of Health Economics, Elsevier, vol. 21(2), pages 337-353, March.
  3. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, December.
  4. Gaynor, Martin & Pauly, Mark V, 1990. "Compensation and Productive Efficiency of Partnerships: Evidence from Medical Group Practice," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 544-73, June.
  5. Jason Barro & Nancy Beaulieu, 2003. "Selection and Improvement: Physician Responses to Financial Incentives," NBER Working Papers 10017, National Bureau of Economic Research, Inc.
  6. Kathleen J. Mullen & Richard G. Frank & Meredith B. Rosenthal, 2009. "Can You Get What You Pay For? Pay-For-Performance and the Quality of Healthcare Providers," Working Papers 680, RAND Corporation Publications Department.
  7. Edward P. Lazear, 1996. "Performance Pay and Productivity," NBER Working Papers 5672, National Bureau of Economic Research, Inc.
  8. Devlin, Rose Anne & Sarma, Sisira, 2008. "Do physician remuneration schemes matter? The case of Canadian family physicians," Journal of Health Economics, Elsevier, vol. 27(5), pages 1168-1181, September.
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Cited by:
  1. Dominic Coey, 2013. "Physician Incentives and Treatment Choices in Heart Attack Management," Discussion Papers 12-027, Stanford Institute for Economic Policy Research.

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