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Performance pay, productivity, and strategic opt-out: Evidence from a community health center

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  • Cadena, Brian C.
  • Smith, Austin C.

Abstract

We use data from a health center serving primarily low-income patients to examine medical providers’ output responses to a change from a salary-based compensation plan to one that rewards providers for seeing more patients each month. Providers working for piece rates produce 18 percent more patient encounters, but only a small portion of this increase was due to individual responses to the incentives. The remainder resulted from changes in workforce composition and from providers’ strategic choices about when to join the piece-rate plan. The small incentive effect is consistent with experimental evidence that effort is less sensitive to financial incentives when individuals work for an organization whose mission is aligned with their values.

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  • Cadena, Brian C. & Smith, Austin C., 2022. "Performance pay, productivity, and strategic opt-out: Evidence from a community health center," Journal of Public Economics, Elsevier, vol. 206(C).
    • Handle: RePEc:eee:pubeco:v:206:y:2022:i:c:s0047272721002164
    DOI: 10.1016/j.jpubeco.2021.104580
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    Cited by:

    1. 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).
    2. Kingsada, Aimée, 2024. "Can financial incentives improve access to care? Evidence from a French experiment on specialist physicians," Social Science & Medicine, Elsevier, vol. 352(C).
    3. 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.
    4. Nicholas Benson & Jose Joaquin Lopez, 2024. "Surgeons' response to reimbursement changes for alternative procedures: Evidence from spine fusion in the U.S," Contemporary Economic Policy, Western Economic Association International, vol. 42(1), pages 41-55, January.

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    More about this item

    Keywords

    Piece rates; Incentive pay; Medical providers;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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