Study Overview
The choice to adopt an effective healthcare product is often a joint decision between the patient and their medical professional. Many governments and payers use patient subsidies and provider incentives to increase the adoption of new health technologies. Using data from a randomized field experiment in Kenya, I estimate a structural model of patient demand and provider advice for a new contraceptive method. I then use the model to study the welfare effects to the patient from the introduction of demand and supply side incentives to adopt the new technology. This approach allows the study of channels that promote diffusion, including the roles of provider advice, financial incentives and altruism, as well as patient preferences.
Study Results
Taken together, the results suggest that changes in provider advice due to their altruism and financial incentives are key to increasing adoption of the new technology and making incentive programs effective, regardless of whether the incentive targets the patient or the provider. In fact, changes in provider advice account for 79% of the welfare benefits of a policy that reduces the price to the patient. To be effective, incentive policies need to account for the central role that the provider takes in medical decision-making.
Intervention: Diagnostic-contingent incentive contract
Intervention Partner: Maisha Meds
Working Paper: Paramo, Carlos. 2025. "Who calls the shots? Financial incentives and provider influence in the adoption of new technology"