Competition and screening with motivated health professionals

• Published in: Journal of health economics Vol. 50; pp. 358 - 371
• Main Authors: Barigozzi, Francesca, Burani, Nadia
• Format: Journal Article
• Language: English
• Published: Netherlands Elsevier B.V 01.12.2016; Elsevier Sequoia S.A
• Subjects: Bidimensional screening; Competition; Economic Competition; Equilibrium; For-profit vs non-profit hospitals; Health administration; Health Facilities, Proprietary; Health Personnel; Hospitals; Hospitals, Proprietary; Hospitals, Voluntary; Humans; Intrinsic motivation; Medical personnel; Medical screening; Motivation; Multi-principals; Nonprofit hospitals; Nonprofit organizations; Occupational health; Ownership; Personnel Selection; Private sector; Profits; Sacrifices; Skills; Studies; United States; Wage differential; Wages & salaries; Workers; Intrinsic motivation; D86; Skills; Bidimensional screening; I11; J31; L31; For-profit vs non-profit hospitals; J24; Multi-principals; Wage differential
• ISSN: 0167-6296; 1879-1646
• DOI: 10.1016/j.jhealeco.2016.06.003

•A for-profit and a non-profit hospital compete to hire health professionals.•Workers are privately informed about their ability and motivation.•Sorting of workers to hospitals is efficient and ability-neutral.•Allocative distortions are decreasing in the degree of competition.•Motivated workers tend to provide a higher amount of care and are paid less. 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.