Monetary incentives versus public funding in healthcare research: what matters the most?

[Download Paper] We study the impact of two policy interventions on scientific research productivity among high-skilled workers in a major private Italian hospital. The first is a performance-based monetary incentive scheme (Management-by-Objectives, MBO) aimed at non-academic physicians. The second is the hospital’s recognition as a Scientific Institute for Research, Hospitalization and Healthcare (IRCCS), which enhances the access to public funding to researchers. Using detailed panel data on physicians’ publications over the period 2012–2022, we implement difference-in-differences strategies to evaluate the effects of both policies. We find that monetary incentives alone do not lead to a significant increase in research output among non-academic physicians. By contrast, IRCCS recognition generates a large and persistent increase in productivity among academic researchers and individuals exposed to both policies. The increase in output is primarily driven by access to stable institutional funding rather than competitive project-based grants, and is associated with a substantial expansion of research teams. This expansion works mostly through the intensive margin, with larger and more interconnected groups of existing collaborators, and is concentrated within the academic group, with limited cross-group spillovers. Consistently, the increase in research output is broad-based across fields, with little evidence of reallocation. Finally, we examine research quality using citation-based measures and healthcare indicators. While IRCCS recognition increases total citations through higher volumes, it is linked with a drop in citations per paper. In contrast, MBO-treated physicians exhibit improvements in average citation impact. The absence of evidence on gaming suggests these patterns reflect a quantity–quality trade-off. Finally, the increase in research activity is accompanied by a substantial expansion in the volume of high-complexity surgical procedures, with no systematic evidence of changes in healthcare quality outcomes as measured by PNE indicators.

Keywords: High-skilled Workers, Knowledge Production, Management-By-Objective, Public Funding, Research Productivity JEL Classification: I10, I23.