Different Strokes for Different Folks? Experimental Evidence on the Effectiveness of Input and Output Incentive Contracts for Health Care Providers with Varying Skills

A central issue in designing incentive contracts is the decision to reward agents’ input use versus outputs. The trade-off between risk and return to innovation in production can also lead agents with varying skill levels to perform differentially under different contracts. We study this issue experimentally, observing and verifying inputs and outputs in Indian maternity care. We find that both contract types achieve comparable reductions in postpartum hemorrhage rates, but payments for outputs were four times that of inputs. Providers with varying qualifications performed equivalently under input incentives, while providers with advanced qualifications may have performed better under output contracts. (JEL D82, D86, I12, J13, J16, J41, O15)

Balancing altruism and self-interest: GP and patient implications

This paper explores how general practitioners (GPs) address potentially opposing motivations stemming from being altruistic and self-interested, and the implications for patients and GPs. The author finds that GPs address dual goals of patient care and profit generation. This can be challenging, while professional values (altruism) encourage a patient focus, business realities (self-interest) mandate other priorities. Viewing clinicians as altruistic in isolation of business needs is unrealistic, as is the notion that profit is the dominant motivation. A blending of interests occurs, pursuing reasonable self-interest, patients’ best interests are ultimately met. GPs need a profit focus to sustain/improve the practice, benefitting patients through continued availability and capacity for enhancement. Therefore, it is argued that GPs behave in a manner that is ‘part altruistic, part self-interested’ and mutually beneficial. These insights should be considered in designing incentive systems for GPs, raising compelling questions about contemporary understanding of the nature of professionals.

Designing incentive pay practices to motivate not alienate: why firms adopt different payment practice configurations in different countries

Purpose Examines the reward structures used by private-sector firms in different locations. Design/methodology/approach Analyzes the prevailing incentive pay practice configurations in 14 countries over four continents. Investigates the extent to which local factors constrain firms’ use of personal and team bonuses or profit-sharing. Findings “When in Rome, do as the Romans do” – an old saying but still relevant for the growing number of firms operating in several countries. A well-thought-out incentive scheme encourages employees to think and act in ways that support company objectives. But people in different places can have different ideas about what is fair and appropriate. Human resource professionals have to decide whether to follow the local norms or to introduce the firm’s established practices – and an informed decision can make the difference between having a motivated workforce or making an expensive mistake. Practical implications Observes that organizations in some countries show a strong preference for a particular bundle of incentive options. Warns that introducing a different approach may prove counter-productive unless combined with a careful process of change management. Social implications Highlights the importance of institutional context and social norms in determining the incentive pay configurations adopted in different countries. Originality/value Provides an international guide to prevailing patterns of incentive payment adoption. Shows that external constraints specific to individual countries can have a significant impact on the flexibility of incentive system design.