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Policy Analysis in the Health-Services Market: Accounting for Quality and Quantity

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  • Bernard Fortin
  • Nicolas Jacquemet
  • Bruce Shearer

Abstract

We provide a theoretical and empirical framework for evaluating the effects of policy reforms on physician labor supply. We argue that any policy evaluation must account for both the quality and the quantity of services provided. The introduction of quality into the analysis has implications for both the theoretical and empirical analysis of labor supply, and consequently policy evaluation. In particular, endogenous quality choices introduce non-linearities into the budget constraint since the marginal return to an hour of work depends on the quality of services provided. We illustrate by considering a particular example: the recent reform in compensation contracts for specialist physicians in the province of Quebec (Canada). Prior to 1999, most Quebec specialist physicians were paid fee-for-service contracts; they received a piece rate for each clinical service provided. In 1999, the government introduced a mixed remuneration system, under which physicians received a base (half-daily or daily) wage, independent of services provided, and a reduced fee-for-service. Moreover, the government allowed physicians to choose their contract. We derive theoretical results for the effect of the reform on the quantity and quality of services supplied by analyzing "local" prices and virtual income. We propose discretizing the choice set as an empirical approach to policy evaluation in the presence of non-linear budget constraints.

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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 0807.

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Date of creation: 2008
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Handle: RePEc:lvl:lacicr:0807

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Keywords: Health production; Quality of health services; Discretized models;

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Cited by:
  1. David Bardey & Helmuth Cremer & Jean-Marie Lozachmeur, 2011. "Doctors´ remuneration schemes and hospital competition in two-sided markets with common network externalities," DOCUMENTOS DE TRABAJO 008848, UNIVERSIDAD DEL ROSARIO.
  2. Fortin, Bernard & Jacquemet, Nicolas & Shearer, Bruce, 2010. "Labour Supply, Work Effort and Contract Choice: Theory and Evidence on Physicians," CLSSRN working papers clsrn_admin-2010-30, Vancouver School of Economics, revised 21 Oct 2010.
  3. Weeks, William B. & Paraponaris, Alain & Ventelou, Bruno, 2013. "Sex-based differences in income and response to proposed financial incentives among general practitioners in France," Health Policy, Elsevier, vol. 113(1), pages 199-205.
  4. Etienne Dumont & Bernard Fortin & Nicolas Jacquemet & Bruce Shearer, 2008. "Physicians' Multitasking and Incentives: Empirical Evidence from a Natural Experiment," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00305308, HAL.
  5. Marie Allard & Izabela Jelovac & Pierre-Thomas Léger, 2014. "Payment mechanism and GP self-selection: capitation versus fee for service," International Journal of Health Care Finance and Economics, Springer, vol. 14(2), pages 143-160, June.
  6. Marie Allard & Izabela Jelovac & Pierre-Thomas Léger, 2010. "Physicians self selection of a payment mechanism: Capitation versus fee-for-service," Working Papers 1024, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  7. repec:hal:journl:halshs-00305308 is not listed on IDEAS

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