Do Extrinsically Motivated Mental Health Care Providers Have Better Treatment Outcomes?

This study compares different responses to financial incentives between self-employed providers in Dutch mental health care. We find that these different responses are related to differences in treatment duration and treatment outcome. In 2008, a new compensation scheme was introduced for self-employed mental health care providers in the Netherlands. The compensation that self-employed psychologists and psychiatrists received for each patient is based on the total treatment duration. The compensation increases step-wise after 800, 1800 and 3000 minutes of treatment with a large amount. It therefore provides strong financial incentives for providers to prolong their treatment till just after the threshold. Using a large administrative dataset, we exploit these different responses by providers to separate more extrinsically from non-extrinsically motivated providers. We find that the majority of the providers are, to some degree, extrinsically motivated and strategically set treatment duration to exploit the thresholds in the compensation scheme. Some providers choose to end all treatments at 800, 1800 or 3000 minutes, most providers choose to occasionally set the treatment duration strategically and some providers do not take the thresholds into account at all. Next, we study total treatment duration and treatment outcomes of all providers. Treatment outcome is measured with the increase of the GAF score of patients (the Global Assessment of Functioning is a subjective assessment by the provider regarding the mental well-being of the patient and the patient's functioning in daily life). We find that non-extrinsically motivated providers, who do not strategically set treatment duration, treat mental health patients shorter, receive less compensation and report better treatment outcomes, as measured by the improvement in GAF score. This suggests that the compensation scheme rewards inefficient or low quality providers.