Pay scheme preferences and health policy objectives

Abstract

This paper studies the preferences among healthcare workers towards pay schemes involving different levels of risk. It identifies which pay scheme individuals would prefer for themselves, and which they think is best in furthering health policy objectives. The paper adds, methodologically, a way of defining pay schemes that include different levels of risk. A questionnaire was mailed to a random sample of 1111 dentists. Respondents provided information about their current and preferred pay schemes, and indicated which pay scheme, in their opinion, would best further overall health policy objectives. A total of 504 dentists (45%) returned the questionnaire, and there was no indication of systematic non-response bias. All public dentists had a current pay scheme based on a fixed salary and the majority of individuals preferred a pay scheme with more income risk. Their preferred pay schemes coincided with the ones believed to further stabilise healthcare personnel. The predominant current pay scheme among private dentists was based solely on individual output, and the majority of respondents preferred this pay scheme. In addition, their preferred pay schemes coincided with the ones believed to further efficiency objectives. Both public and private dentists believed that pay schemes, furthering efficiency objectives, had to include more performance-related pay than the ones believed to further stability and quality objectives.