Long-Term Effects of Temporary Incentives on Productivity in Medical Care Clinics

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We show that costs of adjustment as opposed to low returns likely explain why better quality care practices diffuse slowly in the medical industry.  Using a randomized field experiment conducted in Argentina, we find that temporary financial incentives paid to health clinics for the early initiation of prenatal care ‘nudged’ providers to test and develop new data driven strategies to locate and encourage likely pregnant women to seek care in the first trimester of pregnancy.  These innovations raised the rate of early initiation of prenatal care by 34% while the incentives were being paid in the treatment period.  We follow health clinics over time and find that this increase persisted for at least 24 months after the incentives ended.   In the absence of incentives, even though it is in the clinics’ interest to stimulate early initiation of care, the presence of hard to change habits and cost of experimentation made it too expensive to develop and implement new methods to increase early initiation of care. Despite the large increases in early initiation of prenatal care, we find no effects on health outcomes.

Palabras claves: Financial Incentives, Technology Adoption, Medical Care, Fixed Costs, Randomized Evaluation