Treatment and referral decisions under different physician payment mechanisms

Marie Allard, Izabela Jelovac and Pierre-Thomas Léger
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Marie Allard: HEC Montréal - HEC Montréal
Pierre-Thomas Léger: HEC Montréal - HEC Montréal, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - UQAM - Université du Québec à Montréal = University of Québec in Montréal, CIRPEE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi - Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi

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Abstract: This paper analyzes and compares the incentive properties of some common payment mechanisms for GPs, namely fee for service (FFS), capitation and fundholding. It focuses on gatekeeping GPs and it speci cally recognizes GPs heterogeneity in both ability and altruism. It also allows inappropriate care by GPs to lead to more serious illnesses. The results are as follows. Capitation is the payment mechanism that induces the most referrals to expensive specialty care. Fundholding may induce almost as much referrals as capitation when the expected costs of GPs care are high relative to those of specialty care. Although driven by nancial incentives of different nature, the strategic behaviours associated with fundholding and FFS are very much alike. Finally, whether a regulator should use one or another payment mechanism for GPs will depend on (i) his priorities (either cost-containment or quality enhancement) which, in turn, depend on the expected cost difference between GPs care and specialty care, and (ii) the distribution of pro les (diagnostic ability and altruism levels) among GPs.

Keywords: physician; payment; mechanisms (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-hea
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-00650933v1
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Citations: View citations in EconPapers (58)

Published in Journal of Health Economics, 2011, 30 (5), pp. 880-893

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00650933

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