We analyze the effects of a mixed compensation (MC) scheme for specialists on the quality of their healthcare services. To do so, we exploit a major reform that was implemented in Quebec (Canada) in 1999. The government introduced a payment mechanism combining a fixed per diem with a reduced fee per clinical service. Using panel patient-doctor data covering the period 1996-2016 and including 320,441 patients, we estimate a multi-state multi-spell hazard model with correlated heterogeneity, analogous to a difference-in-differences approach. We compute three output-based quality indicators from our model. Our results suggest that the reform reduced the quality of MC specialist services as measured by the risk of re-hospitalization within 30 days after discharge and the risk of mortality within one year after discharge. These effects vary depending upon the specialty of the treating doctor.

This study was published in an article in the scientific journal Health Economics in 2025.