Why it matters  

Economic behaviour suggests that the way healthcare providers are paid e.g. monthly salary, fee-for-service, capitation, can influence their behaviour which in turn can affect both the quality and efficiency of care. However, evidence on these effects is mixed and limited by a number of methodological challenges.

The new national health insurance (NHI) scheme in South Africa will involve significant changes to the methods of paying health care providers. At present private general practitioners and specialists are remunerated by fee-for-service, whereas under NHI, accredited private providers will be paid using a risk-adjusted capitation system. Public sector health professionals are currently paid a monthly salary whereas the NHI proposals suggest that pay-for-performance systems may be introduced.   

What  we did  

For the first phase, researchers have used experimental methods (Discrete Choice Experiments + experimental games) to isolate the effects of different payment mechanisms on individual decision making. This initial phase of research was conducted under laboratory conditions, using hypothetical clinical scenarios to assess the impact of different incentives on the quantity (productivity) and quality of outputs of 132 participants. 

Subsequent phases of research used a more realistic evaluation of changes introduced under NHI. 

What we found    

• Salary yields the lowest quantity of output, and fee-for-service the highest. 
  However, the highest quality is achieved when participants are paid by salary, followed by capitation.
   
• Financial incentives are strong for those who need to be motivated, but do not affect subjects who are intrinsically motivated to work well.
   
• When work quality benefits patients directly, subjects improve the quality of their output, while maintaining the same levels of productivity.