As you note, the key is being able to precisely select applicants based on altruism:
This tension also underpins a frequent argument made by policymakers that extrinsic rewards should be kept low so as to draw in agents who care sufficiently about delivering services per se. A simple conceptual framework makes precise that, in line with prevailing policy concerns, this attracts applicants who are less prosocial conditional on a given level of talent. However, since the outside option is increasing in talent, adding career benefits will draw in more talented individuals, and the marginal, most talented applicant in both groups will have the highest prosociality. Intuitively, since a candidate with high ability will also have a high outside option, if they are applying for the health worker position it must be because they are highly prosocial. The treatment effect on recruited candidates will therefore depend on how candidates are chosen from the pool. If applicants are drawn randomly, there might be a trade-off between talent and prosociality. However, if only the most talented are hired, there will be no trade-off.
As you note, the key is being able to precisely select applicants based on altruism: