Service Motives And Profit Incentives Among Physicians
AbstractWe model physicians as health care professionals who care about their services and monetary rewards. These preferences are heterogeneous. Different physicians trade off the monetary and service motives differently, and therefore respond differently to incentive schemes. Our model is set up for the Norwegian health care system. First, each private practice physician has a patient list, which may have more or less patients than he desires. The physician is paid a fee-for-service reimbursement and a capitation per listed patient. Second, a municipality may obligate the physician to perform 7.5 hours per week of community services. Our data are on an unbalanced panel of 435 physicians, with 412 physicians for the year 2002, and 400 for 2004. A physician’s amount of gross wealth and gross debt in previous periods are used as proxy for preferences for community service. First, for the current period, accumulated wealth and debt are predetermined. Second, wealth and debt capture lifestyle preferences because they correlate with the planned future income and spending. The main results show that both gross debt and gross wealth have negative effects on physicians’ supply of community health services. Gross debt and wealth have no effect on fee-for-service income per listed person in the physician’s practice, and positive effects on the total income from fee-for-service. The higher income from fee-for-service is due to a longer patient list. Patient shortage has no significant effect on physicians’ supply of community services, a positive effect on the fee-for-service income per listed person, and a negative effect on the total income from fee for service. These results support physician preference heterogeneity.
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Bibliographic InfoPaper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2007-042.
Date of creation: Apr 2007
Date of revision: Sep 2007
Other versions of this item:
- Geir Godager & Tor Iversen & Ching-To Ma, 2009. "Service motives and profit incentives among physicians," International Journal of Health Care Finance and Economics, Springer, vol. 9(1), pages 39-57, March.
- Godager, Geir & Iversen, Tor & Ma , Ching-To Albert, 2009. "Service motives and profit incentives among physicans," HERO On line Working Paper Series 2007:4, Oslo University, Health Economics Research Programme.
- I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
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