Competition and screening with motivated health professionals

Abstract

Two hospitals compete for the exclusive services of health professionals, who are privately informed about their ability and motivation. Hospitals differ in their ownership structure and in the mission they pursue. The non-profit hospital sacrifices some profits to follow its mission but becomes attractive for motivated workers. In equilibrium, when both hospitals are active, the sorting of workers to hospitals is efficient and ability-neutral. Allocative distortions are decreasing in the degree of competition and disappear when hospitals are similar. The non-profit hospital tends to provide a higher amount of care and offer lower salaries than the for-profit one.

Training and intrinsic motivation in nonprofit and for-profit organizations

“…Several prior theoretical studies incorporate competition between FP firms (principals) and "mission-oriented" organizations or public ones in the labor market, where the objective of the mission-oriented principal is the success of a project in Besley and Ghatak (2005) and profit in Barigozzi and Burani (2016), and the objective of the public firm is cost-effective production of a given amount of public goods in Dur (2008, 2010). 5 However, those models do not incorporate the non-distribution constraint, which is what fundamentally defines an NP.…”

Competition in public service provision: The role of not-for-profit providers

“…The cost of providing a unit of the service is [c (Q) + c (q)] /θ i , where c(•) is strictly increasing and strictly convex with c (0) = c (0) = 0 and θ i ∈ θ,θ for i ∈ {I, E} an efficiency parameter that can differ between providers. 3 We assume that θ I is known to policy makers and to any potential entrant. The entrant's cost θ E is drawn from a distribution G (θ E ) with support θ,θ and continuous density g (θ E ).…”

“…In future work, it would be interesting to enrich the analysis by looking at the endogenous choice of not-for-profit status. One could also allow for differential selection of providers' employees by competence and motivation, as in Barigozzi and Burani (2016), and how competition affects this. There is, in addition, scope to explore a range of wider contractual possibilities and regulatory approaches.…”

“…The model could straightforwardly be extended to allow for a regulated user fee 2. Having consumers homogeneous in their tastes for quality serves to highlight the role of competition per se, as distinct from more providers increasing welfare simply by offering greater variety 3. A fixed cost per consumer that is independent of quality can be deducted from revenue in specifying p i .…”

Regulation Strategies for the Provision of Paternalistic Goods

“…The second important consideration that arises from our paper is related to the value of intrinsic motivation. Workers in nonprofit organizations may be more intrinsically motivated than in other sectors and while this may lead to adverse selection issues (Barigozzi and Burani ), it may also represent an asset that can be exploited only in some specific settings.…”