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How Does The Type of Remuneration Affect Physician Behavior?

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  • Kurt R. Brekke
  • Tor Helge Holmås
  • Karin Monstad
  • Odd Rune Straume

Abstract

We analyze the effects of fee-for-service versus fixed salary on the treatment decisions of general practitioners (GPs) and on patients’ health outcomes. Using rich Norwegian register data for the period 2009–13, we find that GPs respond strongly and consistently to changes in remuneration type. Compared with fixed salary, GP payment by fee-for-service leads to an increase in the supply of consultations and a higher provision of medical services (along several dimensions) per consultation. This also has significant implications for patients’ health outcomes, with a more than 16 percent reduction in the probability of an emergency hospital admission (more than 46 percent reduction for ambulatory care–sensitive conditions) shortly after a GP consultation.

Suggested Citation

  • Kurt R. Brekke & Tor Helge Holmås & Karin Monstad & Odd Rune Straume, 2020. "How Does The Type of Remuneration Affect Physician Behavior?," American Journal of Health Economics, University of Chicago Press, vol. 6(1), pages 104-138.
    • Handle: RePEc:ucp:amjhec:doi:10.1086/706624
    DOI: 10.1086/706624
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    2. Damien Échevin & Bernard Fortin & Aristide Houndetoungan, 2023. "Healthcare Quality by Specialists under a Mixed Compensation System: an Empirical Analysis," CIRANO Working Papers 2023s-19, CIRANO.
    3. Leif Sörensen & Jan Schlüter, 2021. "How do contract types and incentives influence driver behavior?−An analysis of the Kigali bus network," Palgrave Communications, Palgrave Macmillan, vol. 8(1), pages 1-11, December.

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