Target Income and Its Determinants for General Physicians: An Instrumental Variables Approach Publisher



Bayati M¹ ; Rashidian A^{2, 3}
Source: International Journal of Healthcare Management Published:2018

Abstract

The economic behavior of physicians has a considerable effect on healthcare expenditure. A well-known theory for explaining physicians’ behavior is the target income hypothesis. In this theory, the main issue is concerned with how physicians set their desired income. Therefore, in this study the level and determinants of Iranian general practitioners’ (GPs’) desired income were analyzed. Respondents consisted of 666 GPs. We used instrumental variables (IV) as predictors of actual income in order to address endogeneity and possible measurement error in it. The monthly mean (standard deviation) of target income and the actual income of Iranian GPs were 4877.4 (3445.7) and 2188 (1768.9) USD. The actual income was the most important determinant of target income. GPs with higher economic expectations, as well as GPs dissatisfied with their current professional financial status, and GPs that had a greater willingness to save money set higher target incomes in order to respond to these expectations, to compensate their financial dissatisfaction, and to address the economic instability and financial risk of their practice. Focusing on financial incentives only in the short term can change their behavior, however in the long term, policies related to controlling desired income with focus on views factors can be helpful. © 2017, © 2017 Informa UK Limited, trading as Taylor & Francis Group.