Unnecessary medical treatments place a significant burden on health systems striving for universal health coverage (UHC). This thesis studies inappropriate treatment incentives in the private sector in South Africa, where plans to implement a national health insurance system (NHI) foresee the contracting of private physicians to deliver publicly-funded health care. Private providers are increasingly recognized as necessary partners for UHC success in many low-and-middle-income countries (LMIC). However, aligning the incentives of these actors with UHC and public health goals requires a better understanding of incentive effects in these settings.
I conduct two field experiments with incognito standardized patients (SPs), to both evaluate appropriate care provision and experimentally vary the treatment incentives facing private physicians. First, I run a within-subject experiment with 89 private primary care physicians (GPs) in Johannesburg, to investigate the causal impact of improving patients’ financial protection (insurance cover) on physicians’ quality of care delivery. The results suggest that more insured patients receive a higher level of visible clinical effort, but a lower level of technical care quality – including a higher likelihood of inappropriate antibiotic treatment. Second, I use data from the same experiment to evaluate the impact of patient insurance on the quantity and costs of care. I find that more insured patients are more likely to receive unnecessary diagnostic tests and treatment procedures, and receive more and more expensive branded drugs, resulting in significantly higher care costs. The results on antibiotic treatment and drug treatment quantity and costs occurred despite the absence of any financial incentives attached to drug prescribing for GPs, which suggests the presence of alternative motives for physicians’ treatment decisions that might vary with patient insurance – including intrinsic or altruistic motives. Third, I explore the scope for leveraging such intrinsic motivations to improve physicians’ treatment choices. I conduct a randomized (between-subject) experiment with 80 GPs, to evaluate the impact of intrinsic, informational incentives from private performance audit and feedback (A&F) on physicians’ antibiotic treatment choices and care costs. The findings suggest that private A&F can significantly reduce the likelihood of inappropriate antibiotic treatment for common viral infections that present in primary care, without simultaneously reducing appropriate antibiotic use for bacterial infections or increasing other inappropriate drug treatments. However, improved performance on antibiotic use does not coincide with significantly lower treatment costs or any improvements in measured diagnostic effort or accuracy. There is indicative evidence that prescribing norms and perceived patient expectations may play an important role in mediating private physicians’ treatment choices in all three empirical chapters
