# 1 Introduction

Academic and policy discussions regarding health care increasingly focus on the quality of medical care as a crucial determinant of health outcomes (Cutler 2003). Policy levers to address quality disparities in health care must cover a variety of underlying causes (Baicker and others 2004; Kerr and others 2004; Fisher and others 2004). If geographic variation in practice-quality re fl ects differences in provider competence, the solution lies in geographical incentives for doctors and/or greater movement of patients.<sup>1</sup> If variation in practice quality arises from differing provider effort, stronger performance incentives are called for.

New data on provider competence and effort show that competence and effort both play a role in the quality of medical care received by patients. These data show that what doctors do in practice is very different from what they know they should do.<sup>2</sup> This gap re fl ects the cost of effort relative to reward. And it responds to incentives: Those on a fee-for-service payment scheme are closer to their "knowledge frontier" than those on a fi xed salary. Furthermore, effort and competence are complements, not substitutes. More competent doctors spend more time with patients, ask more questions, and do more examinations. Less competent practitioners deliver poorer health care services because of the direct effects of lower competence and the indirect effect of lower effort-in-practice.

This is the second of two papers on the quality of medical care in urban India that stem from a study of medical practitioners in seven neighborhoods of the capital, Delhi. The fi rst paper examined the “competence” or knowledge of practitioners using medical vignettes (Das and Hammer 2005). Vignettes–a set of standardized hypothetical cases–were presented to practitioners and the questions asked, examinations suggested, and treatments recommended were recorded. The performance of practitioners was then aggregated into an index of competence.

In a second phase of the study observers visited the same practitioners in their clinical practice for a whole day, recording what was actually done in practice.<sup>3</sup> The data allow several types of comparisons between what providers know in principal (competence) and what they do in practice. For all observed interactions in the clinic, general competence can be compared with average effort, aggregated over all patients during the day. We can also make this comparison for the same doctor for the same set of patient conditions as appear in the hypothetical vignettes in some cases.

> 1 Peabody and others (2000) document variation in competence within two institutions in the US. A recent study by Mattoo and Rathindran (2005) for instance suggests signi fi cant gains to trade from higher patient mobility.

> 2 That there could be a difference between what doctors know and what doctors do is vividly illustrated in this excerpt from an interview with a provider during the pre-test phase of the research: Dr. S.: “Yes, there is a lot of diarrhea and dysentery in this locality–what can they do as well? The water is dirty and people do not know to boil it–that’s why their children are always falling sick.”

> DAS: “So, what do you do for children with diarrhea ?” Dr. S.: “What can we do? The usual things–we tell the mother to give water with salt and sugar to the baby and then also give some medicines.”

DAS: “Such as ?”

> Dr.S.: “The usual–metrogyl ( metronidazole), loperamide (an anticholinergic), Furoxone ( furazolidone).”. DAS: “But isn’t ORS enough ?” Dr.S.: “Of course the WHO and others keep saying that we should only give ORS. But if I tell the mother that she should go home and only give the child water with salt and sugar, she will never come back to me; she will only go to the next doctor who will give her all the medicines and then she will think that he is better than me.”

> 3 Our measures of effort re fl ect what doctors do once they show up for work, abstracting from the number of hours they choose to work. Doctors in the public sector are frequently absent, although less so in urban compared to rural areas (Chaudhury and Hammer 2005, Banerjee, Deaton and Du fl o 2004, and Chaudhury and others, 2005)

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