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Physician quality and payment schemes: A theoretical and empirical analysis

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  • Calub, Renz Adrian

Abstract

Physicians are expected to provide the best health care to their patients; however, it cannot be discounted that their practice is driven primarily by incentives. In this paper, we construct a physician utility maximization model that links physician quality to compensation schemes. Results show that relative to fixed payment, fee-for-service and mixed payment yield higher quality. Multinomial treatment effects regression of vignette scores on payment schemes also support this hypothesis, indicating that physicians are still below the best level of quality and that incentives to improve are still present.

Suggested Citation

  • Calub, Renz Adrian, 2014. "Physician quality and payment schemes: A theoretical and empirical analysis," MPRA Paper 66038, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:66038
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    File URL: https://mpra.ub.uni-muenchen.de/92604/2/MPRA_paper_66038.pdf
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    References listed on IDEAS

    as
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    2. 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.
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    4. Partha Deb & Pravin K. Trivedi, 2006. "Maximum simulated likelihood estimation of a negative binomial regression model with multinomial endogenous treatment," Stata Journal, StataCorp LP, vol. 6(2), pages 246-255, June.
    5. Quimbo, Stella & Peabody, John W. & Javier, Xylee & Shimkhada, Riti & Solon, Orville, 2011. "Pushing on a string: How policy might encourage private doctors to compete with the public sector on the basis of quality," Economics Letters, Elsevier, vol. 110(2), pages 101-103, February.
    6. Partha Deb & Papa Seck, 2009. "Internal Migration, Selection Bias and Human Development: Evidence from Indonesia and Mexico," Human Development Research Papers (2009 to present) HDRP-2009-31, Human Development Report Office (HDRO), United Nations Development Programme (UNDP), revised Jul 2009.
    7. Quimbo, Stella A. & Peabody, John W. & Shimkhada, Riti & Woo, Kimberly & Solon, Orville, 2008. "Should we have confidence if a physician is accredited? A study of the relative impacts of accreditation and insurance payments on quality of care in the Philippines," Social Science & Medicine, Elsevier, vol. 67(4), pages 505-510, August.
    8. James Thornton & B. Kelly Eakin, 1997. "The Utility-Maximizing Self-Employed Physician," Journal of Human Resources, University of Wisconsin Press, vol. 32(1), pages 98-128.
    9. 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.
    10. Devlin, Rose Anne & Sarma, Sisira, 2008. "Do physician remuneration schemes matter? The case of Canadian family physicians," Journal of Health Economics, Elsevier, vol. 27(5), pages 1168-1181, September.
    11. repec:adr:anecst:y:2006:i:83-84:p:09 is not listed on IDEAS
    12. Dan Shane; & Pravin Trivedi;, 2012. "What Drives Differences in Health Care Demand? The Role of Health Insurance and Selection Bias," Health, Econometrics and Data Group (HEDG) Working Papers 12/09, HEDG, c/o Department of Economics, University of York.
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    More about this item

    Keywords

    Physician; quality of healthcare; incentives; compensation schemes;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations

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