How Temporary Incentives Can Increase Long-Run Productivity in Clinics

In implementing best practices in clinics, offsetting initial fixed costs—such as the time and money needed to retool routines—is very important. A randomized control trial run by Pablo Celhay and colleagues finds that temporary financial incentives are a feasible and effective means for overcoming these initial costs, motivating changes in routines that can become permanent even when the incentives are later cut.

Medical care provision involves coordinating a large, complex set of tasks among different groups of workers at interrelated laboratories and departments. Reproducible and stable routines emerge as key to successfully delivering efficient and reliable medical services. However, once established, routines are costly to change. In fact, the vast literature indicates resistance to change as a huge barrier to adhering to the Clinical Practice Guidelines (CPG). As Figure 1 shows, its compliance is remarkably low worldwide.

In this context, temporary incentives may speed up adoption by compensating providers for the initial fixed costs of changing routines. This is precisely what Celhay et al. test in their recent study. They examine the effects of temporary financial incentives for medical care providers to increase early initiation of prenatal care for pregnant women using a randomized control trial in Argentina. Their results suggest that temporary financial incentives motivate long-run changes in performance at a substantially lower cost than permanent incentives.

The field experiment was conducted by Plan Nacer, a public insurance program focused on improving access to quality healthcare for otherwise uninsured pregnant woman and children under six years of age. The study focused on primary healthcare clinics in the Province of Misiones, one of the poorest regions in Argentina. It randomized temporary financial incentives to clinics consisting of a 200 percent premium for early initiation of prenatal care (i.e. before week 13), an increase from $10 to $30. Prenatal care is one of the objectives of Plan Nacer because of its well known benefits.

This adjusted fee structure was implemented for eight months during 2010, after which it returned to an original value. The treatment was randomly assigned to 18 clinics—another 19 clinics formed the control group—and all were participants of Plan Nacer in Misiones.

Prior to participation in the study, Plan Nacer had already been using financial incentives to ensure that beneficiaries received high quality care. This made the experiment implementation very simple. Providers and beneficiaries already understood the general incentive structure. Secondly, the Province of Misiones maintains a long-established automated medical records system with key outcomes, such as dates of visits and services delivered, which allowed researchers to work with a high quality database.

The results of the experiment are quite significant. During the intervention period, the share of women in the treatment group who had their first visit before week 13 was 35 percent higher than in the control group. More importantly, after the incentive was removed, this difference remained almost constant for at least two more years. These results are consistent with the hypothesis that temporary incentives can help to overcome behavioral inertia and motivate long-run changes in performance.

The researchers find that treatment clinics adopted new practices and changed routines as a result of these incentives. The clinics also expanded the scope of community health workers to encourage newly pregnant women to initiate their prenatal care early. Not only did the clinic outreach activities double during the intervention and the post-intervention period, but several innovative strategies were also developed. Health workers started targeting women at high risk of not coming in for an early checkup, many of whom were also eligible for weekly free milk distribution for their older children. Workers met with these women during the milk distribution, and offered an instant-read pregnancy test to those women whose menstruation was overdue.

Surprisingly, the study did not find improvements in health outcomes, like birth weight or premature birth rates. This implies that the incentives helped enroll more women in prenatal care, but not the women at risk of low birth weight or premature birth. The sample could be too small to be able to detect a statistically significant effect on outcome. Additionally, despite the medical literature, it is possible that early initiation of care matters a great deal only for high-risk patients, such as smokers and substance abusers. Theoretically, incentives could be targeted to a specific population—but when it comes to prenatal health, it is often difficult to observe which pregnant women are at risk for negative health outcomes. As the study states, this may be a major limitation of using incentive contracts to improve health outcomes.

Article Source: Celhay, Pablo, Paul Gertler, Paula Giovagnoli, and Christel Vermeersch. “Long Run Effects of Temporary Incentives on Medical Care Productivity.” National Bureau of Economic Research Working Paper 21361, 2015.

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