The interplay of physician performance pay and personality traits
It is widely acknowledged that traditional approaches such as fee-for-service and capitation to remunerate physicians provide financial incentives to deviate from a patient-optimal level of care. Performance pay present a promising policy approach to align physicians’ financial incentives with a high quality of care. Despite the increasing popularity of P4P initiatives in practice, empirical evidence on the effect on the quality of care is rather mixed and inclusive (e.g., Scott et al., 2011; Mathes et al., 2019; and Jia et al., 2021).
While recent experimental evidence shows that introducing performance pay increases the quality of medical care, it also reveals a lot of heterogeneity in behavior (e.g., Brosig-Koch et al., 2020; Oxholm et al., 2021). Contributing to the growing body of literature on the heterogeneity in physicians’ responses, we study how responses to performance incentives for physicians aimed at improving the quality of care relate to an individual's personality traits.
We utilize data from a series of controlled behavioral experiments and surveys on personality traits with physicians, medical students, and non-medical students. In the experiment, performance pay is introduced to complement either fee-for-service or capitation at a within-subject level, allowing for causal evidence about the effect of performance pay on the quality of care. Performance pay in form of a discrete bonus is granted whenever a quality threshold is reached.
Behavioral data evidence that performance pay significantly improves the quality of care under both payment systems. More conscientious and agreeable individuals respond significantly less to incentives under performance pay blended with capitation. Other personality traits, such as extraversion, openness, and neuroticism, are not significantly related to individuals' behavior. Under fee-for-service payments, however, personality traits are not behaviorally relevant.
These findings seem informative for better incentivizing physicians and sorting them into incentive schemes. Our paper contributes to the growing literature in understanding the heterogeneity of individual responses to performance incentives.
While recent experimental evidence shows that introducing performance pay increases the quality of medical care, it also reveals a lot of heterogeneity in behavior (e.g., Brosig-Koch et al., 2020; Oxholm et al., 2021). Contributing to the growing body of literature on the heterogeneity in physicians’ responses, we study how responses to performance incentives for physicians aimed at improving the quality of care relate to an individual's personality traits.
We utilize data from a series of controlled behavioral experiments and surveys on personality traits with physicians, medical students, and non-medical students. In the experiment, performance pay is introduced to complement either fee-for-service or capitation at a within-subject level, allowing for causal evidence about the effect of performance pay on the quality of care. Performance pay in form of a discrete bonus is granted whenever a quality threshold is reached.
Behavioral data evidence that performance pay significantly improves the quality of care under both payment systems. More conscientious and agreeable individuals respond significantly less to incentives under performance pay blended with capitation. Other personality traits, such as extraversion, openness, and neuroticism, are not significantly related to individuals' behavior. Under fee-for-service payments, however, personality traits are not behaviorally relevant.
These findings seem informative for better incentivizing physicians and sorting them into incentive schemes. Our paper contributes to the growing literature in understanding the heterogeneity of individual responses to performance incentives.