Working paper 01/037 - Abstract

Team-Based Incentives in the NHS: An Economic Analysis

Marisa Ratto with Simon Burgess, Bronwyn Croxson, Ian Jewitt and Carol Propper

The NHS Plan welcomes the use of team rewards but does not specify how team based incentives are to be implemented or make clear what types of teams such incentives are to be given to. This paper looks for insights from economic theory on how to define teams and optimal incentive schemes within them. We give a brief description of the incentive mechanisms suggested in the NHS Plan and discuss the implications of the economic theory of team-incentives to the NHS. One implication is that the optimal compensation scheme depends on the type of team. Hence, the definition of teams in the NHS should precede the identification of the system of team rewards. We therefore examine which types of teams might be suitable for team rewards. We then consider issues in the use of financial incentives for such teams.

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