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Service Motives And Profit Incentives Among Physicians

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  • Greir Godager

    () (Department of Health Management and Health Economics, University of Oslo)

  • Tor Iversen

    () (Department of Health Management and Health Economics, University of Oslo)

  • Ching-to Albert Ma

    () (Department of Economics, Boston University and University of Oslo)

Abstract

We 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 Info

Paper provided by Boston University - Department of Economics in its series Boston University - Department of Economics - Working Papers Series with number WP2007-042.

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Length: 39pages
Date of creation: Apr 2007
Date of revision: Sep 2007
Handle: RePEc:bos:wpaper:wp2007-042

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References

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  1. Bazzoli, Gloria J., 1985. "Does educational indebtedness affect physician specialty choice?," Journal of Health Economics, Elsevier, vol. 4(1), pages 1-19, March.
  2. Marc Fox, 2003. "Medical student indebtedness and the propensity to enter academic medicine," Health Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 101-112.
  3. Iversen, Tor, 2009. "A study of income-motivated behavior among general practitioners in the Norwegian list patient system," HERO On line Working Paper Series 2005:8, Oslo University, Health Economics Research Programme.
  4. Culler, Steven D. & Bazzoli, Gloria J., 1985. "The moonlighting decisions of resident physicians," Journal of Health Economics, Elsevier, vol. 4(3), pages 283-292, September.
  5. Moffitt, Robert A., 1999. "New developments in econometric methods for labor market analysis," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 24, pages 1367-1397 Elsevier.
  6. Godager, Geir & Lurås, Hilde, 2009. "I skyggen av Fastlegeordningen: Hvordan har det gått med det offentlige legearbeidet?," HERO On line Working Paper Series 2005:6, Oslo University, Health Economics Research Programme.
  7. Jonathan Gruber & Maria Owings, 1994. "Physician Financial Incentives and Cesarean Section Delivery," NBER Working Papers 4933, National Bureau of Economic Research, Inc.
  8. John List & Matti Liski, 2005. "Introduction," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 31(2), pages 121-121, 06.
  9. Yip, Winnie C., 1998. "Physician response to Medicare fee reductions: changes in the volume of coronary artery bypass graft (CABG) surgeries in the Medicare and private sectors," Journal of Health Economics, Elsevier, vol. 17(6), pages 675-699, December.
  10. James Thornton, 2000. "Physician choice of medical specialty: do economic incentives matter?," Applied Economics, Taylor and Francis Journals, vol. 32(11), pages 1419-1428.
  11. Geir Godager & Hilde Lurås, 2009. "Dual job holding general practitioners: the effect of patient shortage," Health Economics, John Wiley & Sons, Ltd., vol. 18(10), pages 1133-1145.
  12. repec:cup:cbooks:9780521848053 is not listed on IDEAS
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Cited by:
  1. Andreassen Leif & Di Tommaso Maria Laura & Strom Steinar, 2012. "Do medical doctors respond to economic incentives?," Department of Economics Working Papers 201206, University of Turin.
  2. Ching-to Albert MA & Tor Iversen, 2010. "Market conditions and general practitioners’ referrals," Boston University - Department of Economics - Working Papers Series WP2010-023, Boston University - Department of Economics.
  3. Kann, Inger Cathrine & Biørn, Erik & Lurås, Hilde, 2010. "Competition in general practice: Prescriptions to the elderly in a list patient system," Journal of Health Economics, Elsevier, vol. 29(5), pages 751-764, September.
  4. Gianluca Fiorentini & Elisa Iezzi & Matteo Lippi Bruni & Cristina Ugolini, 2011. "Incentives in primary care and their impact on potentially avoidable hospital admissions," The European Journal of Health Economics, Springer, vol. 12(4), pages 297-309, August.

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