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Long-Run Effects of Temporary Incentives on Medical Care Productivity

Author

Listed:
  • Pablo A. Celhay
  • Paul J. Gertler
  • Paula Giovagnoli
  • Christel Vermeersch

Abstract

We show that costs of adjustment as opposed to low perceived value may explain why improved quality care practices diffuse slowly in the medical industry. Using a randomized field experiment conducted in Argentina, we find that temporary financial incentives paid to health clinics for the early initiation of prenatal care motivated providers to test and develop new strategies to locate and encourage pregnant women to seek care in the first trimester of pregnancy. These innovations raised the rate of early initiation of prenatal care by 34 percent while the incentives were being paid in the treatment period. We also find that this increase persisted for at least 24 months after the incentives ended. We show that this is consistent with the presence of up-front costs from adjusting care processes that made it too expensive to develop and implement new strategies to increase early initiation of care in the absence of the incentives. Despite large increases in early initiation of prenatal care, we find no effects on health outcomes.

Suggested Citation

  • Pablo A. Celhay & Paul J. Gertler & Paula Giovagnoli & Christel Vermeersch, 2019. "Long-Run Effects of Temporary Incentives on Medical Care Productivity," American Economic Journal: Applied Economics, American Economic Association, vol. 11(3), pages 92-127, July.
    • Handle: RePEc:aea:aejapp:v:11:y:2019:i:3:p:92-127
    Note: DOI: 10.1257/app.20170128
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    Cited by:

    1. Cala, Petr & Havranek, Tomas & Irsova, Zuzana & Matousek, Jindrich & Novak, Jiri, 2022. "Financial Incentives and Performance: A Meta-Analysis of Economics Evidence," CEPR Discussion Papers 17680, C.E.P.R. Discussion Papers.
    2. Mr. Mauricio Vargas & Santiago Garriga, 2015. "Explaining Inequality and Poverty Reduction in Bolivia," IMF Working Papers 2015/265, International Monetary Fund.
    3. Andrew Dustan & Juan Manuel Hernandez-Agramonte & Stanislao Maldonado, 2018. "Motivating bureaucrats with non-monetary incentives when state capacity is weak: Evidence from large-scale," Natural Field Experiments 00664, The Field Experiments Website.
    4. Vasudha Wattal & Katherine Checkland & Matt Sutton & Marcello Morciano, 2024. "What remains after the money ends? Evidence on whether admission reductions continued following the largest health and social care integration programme in England," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 25(9), pages 1485-1504, December.
    5. Olivia Hawkins & Anna Mae Scott & Amy Montgomery & Bevan Nicholas & Judy Mullan & Antoine van Oijen & Chris Degeling, 2022. "Comparing public attitudes, knowledge, beliefs and behaviours towards antibiotics and antimicrobial resistance in Australia, United Kingdom, and Sweden (2010-2021): A systematic review, meta-analysis,," PLOS ONE, Public Library of Science, vol. 17(1), pages 1-26, January.
    6. Ngo, Diana K.L. & Bauhoff, Sebastian, 2021. "The medium-run and scale-up effects of performance-based financing: An extension of Rwanda’s 2006 trial using secondary data," World Development, Elsevier, vol. 139(C).
    7. Galiani, Sebastian & Gertler, Paul J. & Undurraga, Raimundo, 2021. "Aspiration adaptation in resource-constrained environments," Journal of Urban Economics, Elsevier, vol. 123(C).
    8. Bernal, Pedro & Martinez, Sebastian, 2020. "In-kind incentives and health worker performance: Experimental evidence from El Salvador," Journal of Health Economics, Elsevier, vol. 70(C).
    9. Dustan, Andrew & Maldonado, Stanislao & Hernandez-Agramonte, Juan Manuel, 2018. "Motivating bureaucrats with non-monetary incentives when state capacity is weak: Evidence from large-scale field experiments in Peru," MPRA Paper 90952, University Library of Munich, Germany.
    10. Dustan, Andrew & Hernandez-Agramonte, Juan Manuel & Maldonado, Stanislao, 2023. "Motivating bureaucrats with behavioral insights when state capacity is weak: Evidence from large-scale field experiments in Peru," Journal of Development Economics, Elsevier, vol. 160(C).
    11. Lina Maria Ellegård & Jens Dietrichson & Anders Anell, 2018. "Can pay‐for‐performance to primary care providers stimulate appropriate use of antibiotics?," Health Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 39-54, January.
    12. Sayli Javadekar & Kritika Saxena, 2021. "The Seen and the Unseen: Impact of a Conditional Cash Transfer Program on Prenatal Sex Selection," IHEID Working Papers 15-2021, Economics Section, The Graduate Institute of International Studies.
    13. Alzúa, María Laura & Katzkowicz, Noemí, 2021. "Pay for performance for prenatal care and newborn health: Evidence from a developing country," World Development, Elsevier, vol. 141(C).
    14. O'Neill, Stephen & Grieve, Richard & Singh, Kultar & Dutt, Varun & Powell-Jackson, Timothy, 2024. "Persistence and heterogeneity of the effects of educating mothers to improve child immunisation uptake: Experimental evidence from Uttar Pradesh in India," Journal of Health Economics, Elsevier, vol. 96(C).
    15. Bauhoff,Sebastian Peter Alexander & Kandpal,Eeshani, 2021. "Information, Loss Framing, and Spillovers in Pay-for-Performance Contracts," Policy Research Working Paper Series 9687, The World Bank.
    16. Sayli Javadekar & Kritika Saxena, 2025. "The seen and unseen: the unintended impact of a conditional cash transfer program on prenatal sex selection," Journal of Population Economics, Springer;European Society for Population Economics, vol. 38(1), pages 1-34, March.
    17. Jeannette Brosig-Koch & Mona Groß & Heike Hennig-Schmidt & Nadja Kairies-Schwarz & Daniel Wiesen, 2025. "Physicians’ incentives, patients’ characteristics, and quality of care: a systematic experimental comparison of performance-pay systems," International Journal of Health Economics and Management, Springer, vol. 25(2), pages 217-243, June.
    18. Nava Ashraf & Oriana Bandiera & Edward Davenport & Scott S. Lee, 2020. "Losing Prosociality in the Quest for Talent? Sorting, Selection, and Productivity in the Delivery of Public Services," American Economic Review, American Economic Association, vol. 110(5), pages 1355-1394, May.
    19. Singh, Neha S. & Kovacs, Roxanne J. & Cassidy, Rachel & Kristensen, Søren R. & Borghi, Josephine & Brown, Garrett W., 2021. "A realist review to assess for whom, under what conditions and how pay for performance programmes work in low- and middle-income countries," Social Science & Medicine, Elsevier, vol. 270(C).
    20. Bancalari, Antonella & Bernal, Pedro & Celhay, Pablo & Martinez, Sebastian & Sánchez, Maria Deni, 2023. "An Ounce of Prevention for a Pound of Cure: Efficiency of Community-Based Healthcare," IZA Discussion Papers 16350, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I13 - Health, Education, and Welfare - - Health - - - Health Insurance, Public and Private
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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