Treatment responses of mental health care providers after a demand shock

This paper investigates how two different groups of Dutch mental health care providers responded to an exogenous 20% drop in the number of patients in 2012. Providers that operated under a budget increase treatment duration on average by 8%. We fi nd suggestive evidence for over-treatment as the longer treatments did not result in better patient outcomes, i.e. general assessment of functioning scores. Both professional uncertainty and income effects may explain the results. For the group of self-employed providers, paid by a stepwise fee-for-service function, we find only a small signi cant increase in treatment duration for the least altruistic providers, which we relate to an income effect.