IDEAS home Printed from https://ideas.repec.org/p/iae/iaewps/wp2017n05.html
   My bibliography  Save this paper

Motivation and Competition in Health Care

Author

Listed:
  • Anthony Scott

    (Melbourne Institute: Applied Economic and Social Research, The University of Melbourne)

  • Peter Sivey

    (School of Economics, Finance and Marketing, RMIT University)

Abstract

Non-pecuniary sources of motivation are a strong feature of the health care sector and the impact of competitive incentives may be lower where pecuniary motivation is low. We test this hypothesis by measuring the marginal utility of income of physicians from a stated-choice experiment, and examining whether this measure influences the response of physicians to changes in competition on prices charged. We find that physicians exploit a lack of competition with higher prices only if they have a high marginal utility of income.

Suggested Citation

  • Anthony Scott & Peter Sivey, 2017. "Motivation and Competition in Health Care," Melbourne Institute Working Paper Series wp2017n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    • Handle: RePEc:iae:iaewps:wp2017n05
    as

    Download full text from publisher

    File URL: http://melbourneinstitute.unimelb.edu.au/downloads/working_paper_series/wp2017n05.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Liu, Ting & Ma, Ching-to Albert, 2013. "Health insurance, treatment plan, and delegation to altruistic physician," Journal of Economic Behavior & Organization, Elsevier, vol. 85(C), pages 79-96.
    2. Schaumans, Catherine, 2015. "Prescribing behavior of General Practitioners: Competition matters," Health Policy, Elsevier, vol. 119(4), pages 456-463.
    3. Fehr, Ernst & Falk, Armin, 2002. "Psychological foundations of incentives," European Economic Review, Elsevier, vol. 46(4-5), pages 687-724, May.
    4. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    5. Hugh Gravelle & Anthony Scott & Peter Sivey & Jongsay Yong, 2016. "Competition, prices and quality in the market for physician consultations," Journal of Industrial Economics, Wiley Blackwell, vol. 64(1), pages 135-169, March.
    6. Louviere, Jordan J. & Lancsar, Emily, 2009. "Choice experiments in health: the good, the bad, the ugly and toward a brighter future," Health Economics, Policy and Law, Cambridge University Press, vol. 4(4), pages 527-546, October.
    7. Hennig-Schmidt, Heike & Selten, Reinhard & Wiesen, Daniel, 2011. "How payment systems affect physicians' provision behaviour--An experimental investigation," Journal of Health Economics, Elsevier, vol. 30(4), pages 637-646, July.
    8. Julie Riise Kolstad, 2011. "How to make rural jobs more attractive to health workers. Findings from a discrete choice experiment in Tanzania," Health Economics, John Wiley & Sons, Ltd., vol. 20(2), pages 196-211, February.
    9. Gregg, Paul & Grout, Paul A. & Ratcliffe, Anita & Smith, Sarah & Windmeijer, Frank, 2011. "How important is pro-social behaviour in the delivery of public services?," Journal of Public Economics, Elsevier, vol. 95(7-8), pages 758-766, August.
    10. Iversen, Tor & Luras, Hilde, 2000. "Economic motives and professional norms: the case of general medical practice," Journal of Economic Behavior & Organization, Elsevier, vol. 43(4), pages 447-470, December.
    11. Lagarde, Mylene & Blaauw, Duane, 2014. "Pro-social preferences and self-selection into jobs: Evidence from South African nurses," Journal of Economic Behavior & Organization, Elsevier, vol. 107(PA), pages 136-152.
    12. Danila Serra & Pieter Serneels & Abigail Barr, 2010. "Intrinsic motivations and the non-profit health sector: Evidence from Ethiopia," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 10-01, School of Economics, University of East Anglia, Norwich, UK..
    13. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
    14. Wang, Jian & Iversen, Tor & Hennig-Schmidt, Heike & Godager, Geir, 2020. "Are patient-regarding preferences stable? Evidence from a laboratory experiment with physicians and medical students from different countries," European Economic Review, Elsevier, vol. 125(C).
    15. Timothy Besley & Maitreesh Ghatak, 2005. "Competition and Incentives with Motivated Agents," American Economic Review, American Economic Association, vol. 95(3), pages 616-636, June.
    16. Yong, Jongsay & Scott, Anthony & Gravelle, Hugh & Sivey, Peter & McGrail, Matthew, 2018. "Do rural incentives payments affect entries and exits of general practitioners?," Social Science & Medicine, Elsevier, vol. 214(C), pages 197-205.
    17. Denzil G. Fiebig & Michael P. Keane & Jordan Louviere & Nada Wasi, 2010. "The Generalized Multinomial Logit Model: Accounting for Scale and Coefficient Heterogeneity," Marketing Science, INFORMS, vol. 29(3), pages 393-421, 05-06.
    18. Daniel Bennett & Che-Lun Hung & Tsai-Ling Lauderdale, 2015. "Health Care Competition and Antibiotic Use in Taiwan," Journal of Industrial Economics, Wiley Blackwell, vol. 63(2), pages 371-393, June.
    19. Gravelle, Hugh & Liu, Dan & Propper, Carol & Santos, Rita, 2019. "Spatial competition and quality: Evidence from the English family doctor market," Journal of Health Economics, Elsevier, vol. 68(C).
    20. Emily Lancsar & Jordan Louviere, 2008. "Conducting Discrete Choice Experiments to Inform Healthcare Decision Making," PharmacoEconomics, Springer, vol. 26(8), pages 661-677, August.
    21. Jens Dietrichson & Lina Maria Ellegård & Gustav Kjellsson, 2020. "Patient choice, entry, and the quality of primary care: Evidence from Swedish reforms," Health Economics, John Wiley & Sons, Ltd., vol. 29(6), pages 716-730, June.
    22. Train,Kenneth E., 2009. "Discrete Choice Methods with Simulation," Cambridge Books, Cambridge University Press, number 9780521766555, July.
    23. Arne Hole & Julie Kolstad, 2012. "Mixed logit estimation of willingness to pay distributions: a comparison of models in preference and WTP space using data from a health-related choice experiment," Empirical Economics, Springer, vol. 42(2), pages 445-469, April.
    24. Kurt R. Brekke & Hugh Gravelle & Luigi Siciliani & Odd Rune Straume, 2014. "Patient Choice, Mobility and Competition Among Health Care Providers," Developments in Health Economics and Public Policy, in: Rosella Levaggi & Marcello Montefiori (ed.), Health Care Provision and Patient Mobility, edition 127, pages 1-26, Springer.
    25. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2002. "Identifying Hedonic Models," American Economic Review, American Economic Association, vol. 92(2), pages 304-309, May.
    26. Badi H. Baltagi & Espen Bratberg & Tor Helge Holmås, 2005. "A panel data study of physicians' labor supply: the case of Norway," Health Economics, John Wiley & Sons, Ltd., vol. 14(10), pages 1035-1045, October.
    27. Hess, Stephane & Train, Kenneth, 2017. "Correlation and scale in mixed logit models," Journal of choice modelling, Elsevier, vol. 23(C), pages 1-8.
    28. Godager, Geir & Wiesen, Daniel, 2013. "Profit or patients’ health benefit? Exploring the heterogeneity in physician altruism," Journal of Health Economics, Elsevier, vol. 32(6), pages 1105-1116.
    29. Kurt R. Brekke & Luigi Siciliani & Odd Rune Straume, 2011. "Hospital Competition and Quality with Regulated Prices," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113, pages 444-469, June.
    30. 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.
    31. Jeffrey Clemens & Joshua D. Gottlieb, 2014. "Do Physicians' Financial Incentives Affect Medical Treatment and Patient Health?," American Economic Review, American Economic Association, vol. 104(4), pages 1320-1349, April.
    32. Kolstad, Julie Riise & Lindkvist, Ida, 2010. "Pro-social preferences and self-selection into the public health sector: evidence from economic experiments," Working Papers in Economics 04/10, University of Bergen, Department of Economics.
    33. Ge, Ge & Godager, Geir, 2021. "Predicting strategic medical choices: An application of a quantal response equilibrium choice model," Journal of choice modelling, Elsevier, vol. 39(C).
    34. Scott, Anthony & Witt, Julia & Humphreys, John & Joyce, Catherine & Kalb, Guyonne & Jeon, Sung-Hee & McGrail, Matthew, 2013. "Getting doctors into the bush: General Practitioners' preferences for rural location," Social Science & Medicine, Elsevier, vol. 96(C), pages 33-44.
    35. Bresnahan, Timothy F & Reiss, Peter C, 1991. "Entry and Competition in Concentrated Markets," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 977-1009, October.
    36. Johar, Meliyanni, 2012. "Do doctors charge high income patients more?," Economics Letters, Elsevier, vol. 117(3), pages 596-599.
    37. Godager, Geir & Iversen, Tor & Ma, Ching-to Albert, 2015. "Competition, gatekeeping, and health care access," Journal of Health Economics, Elsevier, vol. 39(C), pages 159-170.
    38. Bruno S. Frey & Reto Jegen, 2001. "Motivation Crowding Theory," Journal of Economic Surveys, Wiley Blackwell, vol. 15(5), pages 589-611, December.
    39. Labelle, Roberta & Stoddart, Greg & Rice, Thomas, 1994. "Editorial: Response to Pauly on a re-examination of the meaning and importance of supplier-induced demand," Journal of Health Economics, Elsevier, vol. 13(4), pages 491-494.
    40. Bruno S. Frey, 1997. "Not Just for the Money," Books, Edward Elgar Publishing, number 1183.
    41. Olivella, Pau & Siciliani, Luigi, 2017. "Reputational concerns with altruistic providers," Journal of Health Economics, Elsevier, vol. 55(C), pages 1-13.
    42. Ellis, Randall P. & McGuire, Thomas G., 1990. "Optimal payment systems for health services," Journal of Health Economics, Elsevier, vol. 9(4), pages 375-396, December.
    43. Meliyanni Johar & Glenn Jones & Elizabeth Savage, 2014. "What Explains The Quality And Price Of Gp Services? An Investigation Using Linked Survey And Administrative Data," Health Economics, John Wiley & Sons, Ltd., vol. 23(9), pages 1115-1133, September.
    44. Makris, Miltiadis, 2009. "Incentives for motivated agents under an administrative constraint," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 428-440, August.
    45. John A. Rizzo & Richard J. Zeckhauser, 2003. "Reference Incomes, Loss Aversion, and Physician Behavior," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 909-922, November.
    46. Rosella Levaggi & Marcello Montefiori (ed.), 2014. "Health Care Provision and Patient Mobility," Developments in Health Economics and Public Policy, Springer, edition 127, number 978-88-470-5480-6, December.
    47. Timothy Besley & Maitreesh Ghatak, 2003. "Incentives, Choice, and Accountability in the Provision of Public Services," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 19(2), pages 235-249, Summer.
    48. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
    49. Jonathan T. Kolstad, 2013. "Information and Quality When Motivation Is Intrinsic: Evidence from Surgeon Report Cards," American Economic Review, American Economic Association, vol. 103(7), pages 2875-2910, December.
    50. Abe Dunn & Adam Hale Shapiro, 2014. "Do Physicians Possess Market Power?," Journal of Law and Economics, University of Chicago Press, vol. 57(1), pages 159-193.
    51. Scott, Anthony, 2001. "Eliciting GPs' preferences for pecuniary and non-pecuniary job characteristics," Journal of Health Economics, Elsevier, vol. 20(3), pages 329-347, May.
    52. Jack, William, 2005. "Purchasing health care services from providers with unknown altruism," Journal of Health Economics, Elsevier, vol. 24(1), pages 73-93, January.
    53. Li, Jing, 2018. "Plastic surgery or primary care? Altruistic preferences and expected specialty choice of U.S. medical students," Journal of Health Economics, Elsevier, vol. 62(C), pages 45-59.
    54. Jonathan T. Kolstad, 2013. "Information and Quality when Motivation is Intrinsic: Evidence from Surgeon Report Cards," NBER Working Papers 18804, National Bureau of Economic Research, Inc.
    55. Labelle, Roberta & Stoddart, Greg & Rice, Thomas, 1994. "A re-examination of the meaning and importance of supplier-induced demand," Journal of Health Economics, Elsevier, vol. 13(3), pages 347-368, October.
    56. Miltiadis Makris & Luigi Siciliani, 2013. "Optimal Incentive Schemes for Altruistic Providers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(5), pages 675-699, October.
    57. Lagarde, Mylène & Blaauw, Duane, 2014. "Pro-social preferences and self-selection into jobs: evidence from South African nurses," LSE Research Online Documents on Economics 85229, London School of Economics and Political Science, LSE Library.
    58. Feldstein, Martin S, 1970. "The Rising Price of Physicians' Services," The Review of Economics and Statistics, MIT Press, vol. 52(2), pages 121-133, May.
    59. Mooney, Gavin & Ryan, Mandy, 1993. "Agency in health care: Getting beyond first principles," Journal of Health Economics, Elsevier, vol. 12(2), pages 125-135, July.
    60. Rizzo, John A. & Zeckhauser, Richard J., 2007. "Pushing incomes to reference points: Why do male doctors earn more?," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 514-536, July.
    61. Siciliani, Luigi, 2009. "Paying for performance and motivation crowding out," Economics Letters, Elsevier, vol. 103(2), pages 68-71, May.
    62. Matthew Quaife & Fern Terris-Prestholt & Gian Luca Di Tanna & Peter Vickerman, 2018. "How well do discrete choice experiments predict health choices? A systematic review and meta-analysis of external validity," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(8), pages 1053-1066, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Susan J. Méndez & Jongsay Yong & Hugh Gravelle & Anthony Scott, 2024. "Medical pricing decisions: Evidence from Australian specialists," Melbourne Institute Working Paper Series wp2024n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    2. Anell, Anders & Dackehag, Margareta & Dietrichson, Jens & Ellegård, Lina Maria & Kjellsson, Gustav, 2022. "Better Off by Risk Adjustment? Socioeconomic Disparities in Care Utilization in Sweden Following a Payment Reform," Working Papers 2022:15, Lund University, Department of Economics, revised 12 Mar 2024.
    3. Anne Sophie Oxholm & Dorte Gyrd-Hansen & Christian Bøtcher Jacobsen & Ulrich Thy Jensen & Line Bjørnskov Pedersen, 2024. "The link between physician motivation and care," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 25(3), pages 525-537, April.
    4. Anne Sophie Oxholm & Dorte Gyrd‐Hansen, 2024. "Do physicians' attitudes toward prioritization predict poor‐health patients' access to care?," Health Economics, John Wiley & Sons, Ltd., vol. 33(8), pages 1649-1659, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Godager , Geir & Scott, Anthony, 2023. "Physician Behavior and Health Outcomes," HERO Online Working Paper Series 2023:3, University of Oslo, Health Economics Research Programme.
    2. Attema, Arthur E. & Galizzi, Matteo M. & Groß, Mona & Hennig-Schmidt, Heike & Karay, Yassin & L’Haridon, Olivier & Wiesen, Daniel, 2023. "The formation of physician altruism," Journal of Health Economics, Elsevier, vol. 87(C).
    3. Godager, Geir & Wiesen, Daniel, 2013. "Profit or patients’ health benefit? Exploring the heterogeneity in physician altruism," Journal of Health Economics, Elsevier, vol. 32(6), pages 1105-1116.
    4. Jeannette Brosig‐Koch & Burkhard Hehenkamp & Johanna Kokot, 2023. "Who benefits from quality competition in health care? A theory and a laboratory experiment on the relevance of patient characteristics," Health Economics, John Wiley & Sons, Ltd., vol. 32(8), pages 1785-1817, August.
    5. Ge Ge & Geir Godager & Jian Wang, 2022. "Exploring physician agency under demand‐side cost sharing—An experimental approach," Health Economics, John Wiley & Sons, Ltd., vol. 31(6), pages 1202-1227, June.
    6. Olivella, Pau & Siciliani, Luigi, 2017. "Reputational concerns with altruistic providers," Journal of Health Economics, Elsevier, vol. 55(C), pages 1-13.
    7. Susan J. Méndez & Jongsay Yong & Hugh Gravelle & Anthony Scott, 2024. "Medical pricing decisions: Evidence from Australian specialists," Melbourne Institute Working Paper Series wp2024n11, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    8. Pedersen, Line Bjørnskov & Hess, Stephane & Kjær, Trine, 2016. "Asymmetric information and user orientation in general practice: Exploring the agency relationship in a best–worst scaling study," Journal of Health Economics, Elsevier, vol. 50(C), pages 115-130.
    9. Jeannette Brosig‐Koch & Heike Hennig‐Schmidt & Nadja Kairies‐Schwarz & Daniel Wiesen, 2017. "The Effects of Introducing Mixed Payment Systems for Physicians: Experimental Evidence," Health Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 243-262, February.
    10. Brosig-Koch, Jeannette & Groß, Mona & Hennig-Schmidt, Heike & Kairies-Schwarz, Nadja & Wiesen, Daniel, 2021. "Physicians' incentives, patients' characteristics, and quality of care: A systematic experimental comparison of fee-for-service, capitation, and pay for performance," Ruhr Economic Papers 923, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    11. Wang, Jian & Iversen, Tor & Hennig-Schmidt, Heike & Godager, Geir, 2020. "Are patient-regarding preferences stable? Evidence from a laboratory experiment with physicians and medical students from different countries," European Economic Review, Elsevier, vol. 125(C).
    12. Waibel, Christian & Wiesen, Daniel, 2021. "An experiment on referrals in health care," European Economic Review, Elsevier, vol. 131(C).
    13. Gravelle, Hugh & Liu, Dan & Propper, Carol & Santos, Rita, 2019. "Spatial competition and quality: Evidence from the English family doctor market," Journal of Health Economics, Elsevier, vol. 68(C).
    14. Hennig-Schmidt, Heike & Wiesen, Daniel, 2014. "Other-regarding behavior and motivation in health care provision: An experiment with medical and non-medical students," Social Science & Medicine, Elsevier, vol. 108(C), pages 156-165.
    15. Li, Jing, 2018. "Plastic surgery or primary care? Altruistic preferences and expected specialty choice of U.S. medical students," Journal of Health Economics, Elsevier, vol. 62(C), pages 45-59.
    16. Brosig-Koch, Jeannette & Hennig-Schmidt, Heike & Kairies-Schwarz, Nadja & Kokot, Johanna & Wiesen, Daniel, 2024. "A new look at physicians’ responses to financial incentives: Quality of care, practice characteristics, and motivations," Journal of Health Economics, Elsevier, vol. 94(C).
    17. Jens Dietrichson & Lina Maria Ellegård & Gustav Kjellsson, 2020. "Patient choice, entry, and the quality of primary care: Evidence from Swedish reforms," Health Economics, John Wiley & Sons, Ltd., vol. 29(6), pages 716-730, June.
    18. Lagarde, Mylène & Blaauw, Duane, 2017. "Physicians’ responses to financial and social incentives: A medically framed real effort experiment," Social Science & Medicine, Elsevier, vol. 179(C), pages 147-159.
    19. Jeannette Brosig‐Koch & Burkhard Hehenkamp & Johanna Kokot, 2017. "The effects of competition on medical service provision," Health Economics, John Wiley & Sons, Ltd., vol. 26(S3), pages 6-20, December.
    20. Galina Besstremyannaya & Sergei Golovan, 2019. "Physician’s altruism in incentive contracts: Medicare’s quality race," CINCH Working Paper Series 1903, Universitaet Duisburg-Essen, Competent in Competition and Health.

    More about this item

    Keywords

    FDoctors; incentives; competition; motivation;
    All these keywords.

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iae:iaewps:wp2017n05. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sheri Carnegie (email available below). General contact details of provider: https://edirc.repec.org/data/mimelau.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.