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Han J, Kairies-Schwarz N, Vomhof M. Strategic behaviour and decision making in competitive hospital markets: an experimental investigation. INTERNATIONAL JOURNAL OF HEALTH ECONOMICS AND MANAGEMENT 2024:10.1007/s10754-024-09366-3. [PMID: 38489122 DOI: 10.1007/s10754-024-09366-3] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [Grants] [Track Full Text] [Subscribe] [Scholar Register] [Received: 03/24/2022] [Accepted: 02/10/2024] [Indexed: 03/17/2024]
Abstract
We investigate quality provision and the occurrence of strategic behaviour in competitive hospital markets where providers are assumed to be semi-altruistic towards patients. For this, we employ a laboratory experiment with a hospital market framing. Subjects decide on the quality levels for one of three competing hospitals respectively. We vary the organizational aspect of whether quality decisions within hospitals are made by individuals or teams. Realized monetary patient benefits go to real patients outside the lab. In both settings, we find that degrees of cooperation quickly converge towards negative values, implying absence of collusion and patient centred or competitive quality choices. Moreover, hospitals treat quality as a strategic complement and adjust their quality choice in the same direction as their competitors. The response magnitude for team markets is weaker; this is driven by non-cooperative or altruistic teams, which tend to set levels of quality that are strategically independent.
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Affiliation(s)
- Johann Han
- Faculty of Economics and Business Administration, University of Duisburg-Essen, Essen, Germany
- CINCH (Competent in Competition and Health), Berliner Platz 6-8, 45127, Essen, Germany
| | - Nadja Kairies-Schwarz
- Institute for Health Services Research and Health Economics, Centre for Health and Society, Medical Faculty and University Hospital Düsseldorf, Heinrich-Heine-University Düsseldorf, Düsseldorf, Germany.
- Institute for Health Services Research and Health Economics, German Diabetes Center, Leibniz Center for Diabetes Research at Heinrich-Heine-University Düsseldorf, Düsseldorf, Germany.
| | - Markus Vomhof
- Institute for Health Services Research and Health Economics, Centre for Health and Society, Medical Faculty and University Hospital Düsseldorf, Heinrich-Heine-University Düsseldorf, Düsseldorf, Germany
- Institute for Health Services Research and Health Economics, German Diabetes Center, Leibniz Center for Diabetes Research at Heinrich-Heine-University Düsseldorf, Düsseldorf, Germany
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Brosig-Koch J, Hennig-Schmidt H, Kairies-Schwarz N, Kokot J, Wiesen D. A new look at physicians' responses to financial incentives: Quality of care, practice characteristics, and motivations. JOURNAL OF HEALTH ECONOMICS 2024; 94:102862. [PMID: 38401249 DOI: 10.1016/j.jhealeco.2024.102862] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 02/14/2023] [Revised: 01/26/2024] [Accepted: 01/31/2024] [Indexed: 02/26/2024]
Abstract
There is considerable controversy about what causes (in)effectiveness of physician performance pay in improving the quality of care. Using a behavioral experiment with German primary-care physicians, we study the incentive effect of performance pay on service provision and quality of care. To explore whether variations in quality are based on the incentive scheme and the interplay with physicians' real-world profit orientation and patient-regarding motivations, we link administrative data on practice characteristics and survey data on physicians' attitudes with experimental data. We find that, under performance pay, quality increases by about 7pp compared to baseline capitation. While the effect increases with the severity of illness, the bonus level does not significantly affect the quality of care. Data linkage indicates that primary-care physicians in high-profit practices provide a lower quality of care. Physicians' other-regarding motivations and attitudes are significant drivers of high treatment quality.
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Affiliation(s)
- Jeannette Brosig-Koch
- Otto von Guericke University Magdeburg and Health Economics Research Center (CINCH) Essen, Germany.
| | | | - Nadja Kairies-Schwarz
- Heinrich-Heine University Düsseldorf, Medical Faculty, Centre for Health and Society (chs) and German Diabetes Center, Leibniz Center for Diabetes Research, Germany.
| | - Johanna Kokot
- University of Hamburg and Hamburg Center for Health Economics, Germany.
| | - Daniel Wiesen
- University of Cologne, Department of Healthcare Management and Center for Social and Economic Behavior (C-SEB), Germany.
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Finocchiaro Castro M, Guccio C, Romeo D. Looking inside the lab: a systematic literature review of economic experiments in health service provision. THE EUROPEAN JOURNAL OF HEALTH ECONOMICS : HEPAC : HEALTH ECONOMICS IN PREVENTION AND CARE 2024:10.1007/s10198-023-01662-y. [PMID: 38212554 DOI: 10.1007/s10198-023-01662-y] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [Track Full Text] [Subscribe] [Scholar Register] [Received: 09/02/2023] [Accepted: 12/14/2023] [Indexed: 01/13/2024]
Abstract
Experimental economics is, nowadays, a well-established approach to investigate agents' behavior under economic incentives. In the last decade, a fast-growing number of studies have focused on the application of experimental methodology to health policy issues. The results of that stream of literature have been intriguing and strongly policy oriented. However, those findings are scattered between different health-related topics, making it difficult to grasp the overall state-of-the-art. Hence, to make the main contributions understandable at a glance, we conduct a systematic literature review of laboratory experiments on the supply of health services. Of the 1248 articles retrieved from 2011, 56 articles published in peer-review journals have met our inclusion criteria. Thus, we have described the experimental designs of each of the selected papers and we have classified them according to their main area of interest.
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Affiliation(s)
- Massimo Finocchiaro Castro
- Department of Law, Economics and Humanities, Mediterranean University of Reggio Calabria, Reggio Calabria, Italy
- Health Econometrics and Data Group, University of York, York, UK
- Institute for Corruption Studies, Illinois State University, Normal, USA
| | - Calogero Guccio
- Department of Economics and Business, University of Catania, Corso Italia 55, 95123, Catania, Italy.
- Health Econometrics and Data Group, University of York, York, UK.
- Institute for Corruption Studies, Illinois State University, Normal, USA.
| | - Domenica Romeo
- Department of Economics and Business, University of Catania, Corso Italia 55, 95123, Catania, Italy
- Health Econometrics and Data Group, University of York, York, UK
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Li X, Teng J, Li X, Lin X, Han Y. The effect of internal salary incentives based on insurance payment on physicians' behavior: experimental evidence. BMC Health Serv Res 2023; 23:1410. [PMID: 38098115 PMCID: PMC10720113 DOI: 10.1186/s12913-023-10408-8] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Grants] [Track Full Text] [Figures] [Journal Information] [Subscribe] [Scholar Register] [Received: 12/01/2022] [Accepted: 11/30/2023] [Indexed: 12/18/2023] Open
Abstract
BACKGROUND Understanding how physicians respond to payment methods is crucial for designing effective incentives and enhancing the insurance system. Previous theoretical research has explored the effects of payment methods on physician behavior based on a two-level incentive path; however, empirical evidence to validate these theoretical frameworks is lacking. To address this research gap, we conducted a laboratory experiment to investigate physicians' behavioral responses to three types of internal salary incentives based on diagnosis-related-group (DRG) and fee-for-service (FFS). METHODS A total of 150 medical students from Capital Medical University were recruited as participants. These subjects played the role of physicians in choosing the quantity of medical services for nine types of patients under three types of salary incentives-fixed wage, constant fixed wage with variable performance wage, and variable fixed wage with variable performance wage, of which performance wage referred to the payment method balance under FFS or DRG. We collected data on the quantities of medical services provided by the participants and analyzed the results using the Friedman test and the fixed effects model. RESULTS The results showed that a fixed wage level did not have a significant impact on physicians' behavior. However, the patients benefited more under the fixed wage compared to other salary incentives. In the case of a floating wage system, which consisted of a constant fixed wage and a variable performance wage from the payment method balance, an increase in performance wage led to a decrease in physicians' service provision under DRG but an increase under FFS. Consequently, this resulted in a decrease in patient benefit. When the salary level remained constant, but the composition of the salary varied, physicians' behavior changed slightly under FFS but not significantly under DRG. Additionally, patient benefits decreased as the ratio of performance wages increased under FFS. CONCLUSIONS While using payment method balance as physicians' salary may be effective in transferring incentives of payment methods to physicians through internal compensation frameworks, it should be used with caution, particularly when the measurement standard of care is imperfect.
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Affiliation(s)
- Xing Li
- School of Public Health, Capital Medical University, No.10 Xitoutiao, Youanmenwai Street, Fengtai District, Beijing, 100069, China
| | - Jiali Teng
- School of Public Health, Capital Medical University, No.10 Xitoutiao, Youanmenwai Street, Fengtai District, Beijing, 100069, China
| | - Xinyan Li
- School of Public Health, Capital Medical University, No.10 Xitoutiao, Youanmenwai Street, Fengtai District, Beijing, 100069, China
| | - Xing Lin
- School of Public Health, Capital Medical University, No.10 Xitoutiao, Youanmenwai Street, Fengtai District, Beijing, 100069, China
| | - Youli Han
- School of Public Health, Capital Medical University, No.10 Xitoutiao, Youanmenwai Street, Fengtai District, Beijing, 100069, China.
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Le Corroller AG, Bonastre J. Patient-reported measures: how useful in health economics? THE EUROPEAN JOURNAL OF HEALTH ECONOMICS : HEPAC : HEALTH ECONOMICS IN PREVENTION AND CARE 2023; 24:1-4. [PMID: 36346476 DOI: 10.1007/s10198-022-01524-z] [Citation(s) in RCA: 1] [Impact Index Per Article: 1.0] [Reference Citation Analysis] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Accepted: 09/02/2022] [Indexed: 06/16/2023]
Affiliation(s)
| | - Julia Bonastre
- Bureau Biostatistique et Epidémiologie, Gustave Roussy, Université Paris-Saclay, Villejuif, France.
- Oncostat CESP, INSERM 1018, UVSQ, Labeled Ligue Contre Le Cancer, Université Paris-Saclay, Villejuif, France.
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Liu L, Nai W, Yang Z. Measuring the State Dependence Effect in Hospital Payment Adjustment. INTERNATIONAL JOURNAL OF ENVIRONMENTAL RESEARCH AND PUBLIC HEALTH 2022; 19:14110. [PMID: 36360987 PMCID: PMC9655927 DOI: 10.3390/ijerph192114110] [Citation(s) in RCA: 0] [Impact Index Per Article: 0] [Reference Citation Analysis] [Abstract] [Key Words] [MESH Headings] [Track Full Text] [Subscribe] [Scholar Register] [Received: 09/17/2022] [Revised: 10/25/2022] [Accepted: 10/27/2022] [Indexed: 06/16/2023]
Abstract
Since FY 2013, as a part of the Affordable Care Act (ACA) program, the Hospital Value-Based Purchasing (HVBP) program has adjusted Medicare's payments to hospitals based on the total performance score of the hospital. First, the program reduces a portion of the hospital's Medicare payments in a specific fiscal year, and then, by the end of the same fiscal year, the amount of the payment reductions will be awarded to the hospitals based on the total performance score; thus, the hospitals that do not receive the reward will lose the portion of money reduced by Medicare. In this research, we apply the theory of state dependence and use the dynamic random effect probit model to estimate this effect. The results show that the hospital payment adjustment dynamics have a very significant state dependence effect (0.341); this means that hospitals that received a reward in the previous year are 34.1% more likely to receive a reward this year than the ones that received a penalty in the previous year. Meanwhile, we also find that the state dependence effect varies significantly across hospitals with different ownership (proprietary/government owned/voluntary nonprofit), and the results show that voluntary nonprofit hospitals exhibit the largest effect of state dependence (0.370), while government-owned hospitals exhibit the lowest effect of state dependence (0.293), and proprietary hospitals are in the middle. Among the factors that influence the likelihood that a hospital receives a reward, we find that teaching hospitals with a large number of beds (>400) are less likely be rewarded; in terms of ownership, we find that voluntary nonprofit hospitals are more likely be rewarded; in terms of demographic factors, hospitals where the average household income are higher within the region are more likely be rewarded.
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Affiliation(s)
- Lu Liu
- School of Business, St. Bonaventure University, St. Bonaventure, NY 14778, USA
| | - Wei Nai
- School of Electronic Information, Huzhou College, Huzhou 313000, China
| | - Zan Yang
- Public Teaching and Research Department, Huzhou College, Huzhou 313000, China
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