NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH
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Long Run Effects of Temporary Incentives on Medical Care Productivity

Pablo Celhay, Paul Gertler, Paula Giovagnoli, Christel Vermeersch

NBER Working Paper No. 21361
Issued in July 2015
NBER Program(s):The Program on Children, The Development Economics Program, The Health Care Program, The Health Economics Program, The Industrial Organization Program, The Productivity, Innovation, and Entrepreneurship Program

The adoption of new clinical practice patterns by medical care providers is often challenging, even when they are believed to be both efficacious and profitable. This paper uses a randomized field experiment to examine the effects of temporary financial incentives paid to medical care clinics for the initiation of prenatal care in the first trimester of pregnancy. The rate of early initiation of prenatal care was 34% higher in the treatment group than in the control group while the incentives were being paid, and this effect persisted at least 24 months or more after the incentives ended. These results are consistent with a model where the incentives enable providers to address the fixed costs of overcoming organizational inertia in innovation, and suggest that temporary incentives may be effective at motivating improvements in long run provider performance at a substantially lower cost than permanent incentives.

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Document Object Identifier (DOI): 10.3386/w21361

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