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Service motives and profit incentives among physicians

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  • Geir Godager
  • Tor Iversen
  • Ching-To Ma
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.
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Suggested Citation

  • Geir Godager & Tor Iversen & Ching-To Ma, 2009. "Service motives and profit incentives among physicians," International Journal of Health Economics and Management, Springer, vol. 9(1), pages 39-57, March.
    • Handle: RePEc:kap:ijhcfe:v:9:y:2009:i:1:p:39-57
    DOI: 10.1007/s10754-008-9046-y
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    1. Iversen, Tor, 2009. "A study of income-motivated behavior among general practitioners in the Norwegian list patient system," HERO Online Working Paper Series 2005:8, University of Oslo, Health Economics Research Programme.
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    7. Culler, Steven D. & Bazzoli, Gloria J., 1985. "The moonlighting decisions of resident physicians," Journal of Health Economics, Elsevier, vol. 4(3), pages 283-292, September.
    8. John List & Matti Liski, 2005. "Introduction," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 31(2), pages 121-121, June.
    9. Cameron,A. Colin & Trivedi,Pravin K., 2005. "Microeconometrics," Cambridge Books, Cambridge University Press, number 9780521848053.
    10. Marc Fox, 2003. "Medical student indebtedness and the propensity to enter academic medicine," Health Economics, John Wiley & Sons, Ltd., vol. 12(2), pages 101-112, February.
    11. Moffitt, Robert A., 1999. "New developments in econometric methods for labor market analysis," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 24, pages 1367-1397, Elsevier.
    12. Geir Godager & Hilde Lurås, 2009. "Dual job holding general practitioners: the effect of patient shortage," Health Economics, John Wiley & Sons, Ltd., vol. 18(10), pages 1133-1145, October.
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    Cited by:

    1. Tor Iversen & Ching-to Ma, 2011. "Market conditions and general practitioners’ referrals," International Journal of Health Economics and Management, Springer, vol. 11(4), pages 245-265, December.
    2. Benedicte Carlsen & Jo Thori Lind & Karine Nyborg, 2020. "Why physicians are lousy gatekeepers: Sicklisting decisions when patients have private information on symptoms," Health Economics, John Wiley & Sons, Ltd., vol. 29(7), pages 778-789, July.
    3. Gianluca Fiorentini & Elisa Iezzi & Matteo Lippi Bruni & Cristina Ugolini, 2011. "Incentives in primary care and their impact on potentially avoidable hospital admissions," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(4), pages 297-309, August.
    4. Andreassen, Leif & Di Tommaso, Maria Laura & Strøm, Steinar, 2013. "Do medical doctors respond to economic incentives?," Journal of Health Economics, Elsevier, vol. 32(2), pages 392-409.
    5. Kann, Inger Cathrine & Biørn, Erik & Lurås, Hilde, 2010. "Competition in general practice: Prescriptions to the elderly in a list patient system," Journal of Health Economics, Elsevier, vol. 29(5), pages 751-764, September.
    6. Greg Stapleton & Peter Schröder-Bäck & Helmut Brand & David Townend, 2014. "Health inequalities and regional specific scarcity in primary care physicians: ethical issues and criteria," International Journal of Public Health, Springer;Swiss School of Public Health (SSPH+), vol. 59(3), pages 449-455, June.
    7. Marie Allard & Izabela Jelovac & Pierre-Thomas Léger, 2014. "Payment mechanism and GP self-selection: capitation versus fee for service," International Journal of Health Economics and Management, Springer, vol. 14(2), pages 143-160, June.
    8. Godager, Geir & Hennig-Schmidt, Heike & Li, Jing Jing & Wang, Jian & Yang, Fan, 2021. "Does gender affect medical decisions? Results from a behavioral experiment with physicians and medical students," HERO Online Working Paper Series 2021:1, University of Oslo, Health Economics Research Programme.
    9. Carlsen, Benedicte & Nyborg, Karine, 2017. "Healer or Gatekeeper? Physicians' Role Conflict When Symptoms Are Non-Verifiable," IZA Discussion Papers 10735, Institute of Labor Economics (IZA).
    10. Ian McRae & James Butler, 2014. "Supply and demand in physician markets: a panel data analysis of GP services in Australia," International Journal of Health Economics and Management, Springer, vol. 14(3), pages 269-287, September.

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    More about this item

    Keywords

    Physician community service; Service motive; Profit motive; C23; C24; I11; I18; J22;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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