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Service Motives And Profit Incentives Among Physicians

Author

Listed:
  • 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.

Suggested Citation

  • Greir Godager & Tor Iversen & Ching-to Albert Ma, 2007. "Service Motives And Profit Incentives Among Physicians," Boston University - Department of Economics - Working Papers Series WP2007-042, Boston University - Department of Economics, revised Sep 2007.
  • Handle: RePEc:bos:wpaper:wp2007-042
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    References listed on IDEAS

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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. 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.
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    9. 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.
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    Cited by:

    1. Greg Stapleton & Peter Schröder-Bäck & Helmut Brand & David Townend, 2014. "Health inequalities and regional specific scarcity in primary care physicians: ethical issues and criteria," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), pages 449-455.
    2. 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;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(4), pages 297-309, August.
    3. Marie Allard & Izabela Jelovac & Pierre-Thomas Léger, 2014. "Payment mechanism and GP self-selection: capitation versus fee for service," International Journal of Health Economics and Management, Springer, pages 143-160.
    4. Philippe Choné & Ching-To Albert Ma, 2011. "Optimal Health Care Contract under Physician Agency," Annals of Economics and Statistics, GENES, issue 101-102, pages 229-256.
    5. Tor Iversen & Ching-to Ma, 2011. "Market conditions and general practitioners’ referrals," International Journal of Health Economics and Management, Springer, vol. 11(4), pages 245-265, December.
    6. Andreassen, Leif & Di Tommaso, Maria Laura & Strøm, Steinar, 2013. "Do medical doctors respond to economic incentives?," Journal of Health Economics, Elsevier, pages 392-409.
    7. Carlsen, Benedicte & Nyborg, Karine, 2017. "Healer or Gatekeeper? Physicians' Role Conflict When Symptoms Are Non-Verifiable," IZA Discussion Papers 10735, Institute for the Study of Labor (IZA).
    8. 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.
    9. Ian McRae & James Butler, 2014. "Supply and demand in physician markets: a panel data analysis of GP services in Australia," International Journal of Health Economics and Management, Springer, vol. 14(3), pages 269-287, September.

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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