Scandinavian Working Papers in Economics
HERO Online Working Paper Series,
University of Oslo, Health Economics Research Programme
No 2007:4: Service motives and profit incentives among physicans
Geir Godager (), Tor Iversen () and Ching-To Albert Ma ()
Additional contact information
Geir Godager: Institute of Health Management and Health Economics, Postal: P.O. Box 1089 Blindern, NO-0317 Oslo, Norway
Tor Iversen: Institute of Health Management and Health Economics, Postal: P.O. Box 1089 Blindern, NO-0317 Oslo, Norway
Ching-To Albert Ma: Department of Economics, Boston University, Postal: and Department of Economics, University of Oslo,, Norway
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; hence, 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 no effect on the total income from fee-for service. These results confirm physician preference heterogeneity.
Keywords: physicians; incentive schemes; patient list; fee-for-service reimbursement; capitation per listed patient
JEL-codes: I18
37 pages, June 3, 2009
Full text files
HERO2007_4.pdf
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