The Great Escape: Physicians Leaving the Public Sector

In many countries, public healthcare systems are facing the unprecedented challenge of attracting new physicians and retaining existing physicians. Given that the role of noneconomic factors in responding to such a challenge is as important as the role played by economic factors, we use outbreaks of healthcare scandals from 2000 to 2020 in approximately 100 Italian provinces to address the impact of perceived corruption on the density of public hospital physicians. The outbreak of a scandal is associated with a 3.6% decrease in the presence of public hospital physicians. The effect is explained mainly by so-called supply-side drivers, such as ethical concerns (i.e., a scandal related to a malpractice case), a lack of motivation in the workplace, concerns about the high salience of the scandal (e.g., more media coverage), and more outside options. Demand-side drivers, such as a lower level of trust on the patient side, which affects the patient distribution and, indirectly, the physician distribution, do not seem to play a crucial role within the institutional setting analyzed. Our results are robust to different staggered DID estimators, the inclusion of trends to capture potential time-varying attitudes toward corrupt behaviors, and the inclusion of variables that are expected to affect both the density of public hospital physicians and the occurrence of scandals. Healthcare scandals do not seem to affect the density of other types of civil servants, such as teachers or firefighters.