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Using Performance Incentives to Improve Medical Care Productivity and Health Outcomes

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  • Gertler, Paul
  • Vermeerch, Christel

Abstract

We nested a large-scale field experiment into the national rollout of the introduction of performance pay for medical care providers in Rwanda to study the effect of incentives for health care providers. In order to identify the effect of incentives separately from higher compensation, we held constant compensation across treatment and comparison groups – a portion of the treatment group’s compensation was based on performance whereas the compensation of the comparison group was fixed. The incentives led to a 20% increase in productivity, and significant improvements in child health. We also find evidence of a strong complementarity between performance incentives and baseline provider skill.

Suggested Citation

  • Gertler, Paul & Vermeerch, Christel, 2013. "Using Performance Incentives to Improve Medical Care Productivity and Health Outcomes," Institute for Research on Labor and Employment, Working Paper Series qt9qn9q7ph, Institute of Industrial Relations, UC Berkeley.
  • Handle: RePEc:cdl:indrel:qt9qn9q7ph
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    References listed on IDEAS

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    1. Nazmul Chaudhury & Jeffrey Hammer & Michael Kremer & Karthik Muralidharan & F. Halsey Rogers, 2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 91-116, Winter.
    2. Scott, A & Schurer, S & Jensen, P H & Sivey, P, 2008. "The Effects of Financial Incentives on Quality of Care: The Case of Diabetes," Health, Econometrics and Data Group (HEDG) Working Papers 08/15, HEDG, c/o Department of Economics, University of York.
    3. Karthik Muralidharan & Venkatesh Sundararaman, 2011. "Teacher Performance Pay: Experimental Evidence from India," Journal of Political Economy, University of Chicago Press, vol. 119(1), pages 39-77.
    4. Jishnu Das & Jeffrey Hammer & Kenneth Leonard, 2008. "The Quality of Medical Advice in Low-Income Countries," Journal of Economic Perspectives, American Economic Association, vol. 22(2), pages 93-114, Spring.
    5. Das, Jishnu & Hammer, Jeffrey, 2007. "Money for nothing: The dire straits of medical practice in Delhi, India," Journal of Development Economics, Elsevier, vol. 83(1), pages 1-36, May.
    6. Ritva Reinikka & Jakob Svensson, 2010. "Working for God? Evidence from a Change in Financing of Nonprofit Health Care Providers in Uganda," Journal of the European Economic Association, MIT Press, vol. 8(6), pages 1159-1178, December.
    7. Valérie Paris & Marion Devaux & Lihan Wei, 2010. "Health Systems Institutional Characteristics: A Survey of 29 OECD Countries," OECD Health Working Papers 50, OECD Publishing.
    8. World Bank, 2010. "Budgeting for Effectiveness in Rwanda : From Reconstruction to Reform," World Bank Publications, The World Bank, number 5953, August.
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    Cited by:

    1. Das,Jishnu & Holla,Alaka & Mohpal,Aakash & Muralidharan,Karthik, 2015. "Quality and accountability in healthcare delivery : audit evidence from primary care providers in India," Policy Research Working Paper Series 7334, The World Bank.
    2. repec:eee:pubeco:v:156:y:2017:i:c:p:150-169 is not listed on IDEAS
    3. Elise Huillery & Juliette Seban, 2015. "Financial Incentives are Counterproductive in Non-Profit Sectors: Evidence from a Health Experiment," Working Papers hal-01164460, HAL.
    4. Elise Huillery & Juliette Seban, 2014. "Performance-Based Financing, Motivation and Final Output in the Health Sector: Experimental Evidence from the Democratic Republic of Congo," Sciences Po Economics Discussion Papers 2014-12, Sciences Po Departement of Economics.
    5. Pascaline Dupas & Edward Miguel, 2016. "Impacts and Determinants of Health Levels in Low-Income Countries," NBER Working Papers 22235, National Bureau of Economic Research, Inc.
    6. Elise Huillery & Juliette Seban, 2014. "Performance-Based Financing, Motivation and Final Output in the Health Sector: Experimental Evidence from the Democratic Republic of Congo," Working Papers hal-01071880, HAL.
    7. Adnan Q. Khan & Asim I. Khwaja & Benjamin A. Olken, 2014. "Tax Farming Redux: Experimental Evidence on Performance Pay for Tax Collectors," NBER Working Papers 20627, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Medicine and Health Sciences; Performance Incentives; Results-Based Financing; Pay-for-Performance; Child Health; Maternal and Child Services;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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