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Labour Supply, Service Intensity and Contract Choice: Theory and Evidence on Physicians

Author

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  • Bernard Fortin

    (CIRPEE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi - Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi)

  • Nicolas Jacquemet

    (CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

  • Bruce Shearer

    (CIRPEE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi - Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi)

Abstract

We develop and estimate a structural model that incorporates service intensity and endogenous contract choice into the standard labour supply framework. We apply our model to data collected on specialist physicians working in Quebec (Canada). These physicians are typically paid a fee-for-service (FFS) contract. Our panel data set covers a period of policy reform which allowed physicians either to remain on FFS or to adopt a mixed remuneration (MR) contract, under which they receive a per diem as well as a reduced FFS. We estimate the preference parameters of physicians governing the choice of contract and their hours worked and services provided. We use our estimates to simulate labour supply elasticities, to predict (ex ante) the effects of contracts on physician behaviour, and to evaluate selection effects. The supply of services is reduced under a MR contract, suggesting incentives matter. The hours spent seeing patients is less sensitive to incentives than the supply of services. Our results suggest that a reform forcing all physicians to adopt the MR system would have had substantially larger effects on physician behaviour than were measured under the observed reform.

Suggested Citation

  • Bernard Fortin & Nicolas Jacquemet & Bruce Shearer, 2019. "Labour Supply, Service Intensity and Contract Choice: Theory and Evidence on Physicians," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-02158484, HAL.
  • Handle: RePEc:hal:cesptp:halshs-02158484
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-02158484
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    Cited by:

    1. Ogundeji, Yewande Kofoworola & Quinn, Amity & Lunney, Meaghan & Chong, Christy & Chew, Derek & Danso, George & Duggan, Shelly & Edwards, Alun & Hopkin, Gareth & Senior, Peter & Sumner, Glen & Williams, 2021. "Factors that influence specialist physician preferences for fee-for-service and salary-based payment models: A qualitative study," Health Policy, Elsevier, vol. 125(4), pages 442-449.
    2. Quinn, Amity E. & Trachtenberg, Aaron J. & McBrien, Kerry A. & Ogundeji, Yewande & Souri, Sepideh & Manns, Liam & Rennert-May, Elissa & Ronksley, Paul & Au, Flora & Arora, Nikita & Hemmelgarn, Brenda , 2020. "Impact of payment model on the behaviour of specialist physicians: A systematic review," Health Policy, Elsevier, vol. 124(4), pages 345-358.
    3. Bruce Shearer & Nibene Habib Somé & Bernard Fortin, 2018. "Measuring Physicians’ Response to Incentives: Evidence on Hours Worked and Multitasking," Cahiers de recherche 1808, Chaire de recherche Industrielle Alliance sur les enjeux économiques des changements démographiques.
    4. Bruce Shearer & Nibene Habib Somé & Bernard Fortin, 2018. "Measuring Physicians’ Response to Incentives: Evidence on Hours Worked and Multitasking," Cahiers de recherche 1809, Centre de recherche sur les risques, les enjeux économiques, et les politiques publiques.

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