Diagnostics and Treatment: On the Division of Labor between Primary Care Physicians and Specialists

Malte Griebenow and Mathias Kifmann

Journal of Institutional and Theoretical Economics (JITE), 2022, vol. 178, issue 2, 191-229

Abstract: This paper analyzes the referral processes between a gatekeeping primary care physician (PCP) and a specialist. Specialists provide superior treatment for some patients but are more costly than PCPs. Agency problems arise because diagnostic signals are the private information of physicians. Welfare-optimizing contracts can call for a markup either to the PCP for treating patients without referral or to the specialist for referring patients back to the PCP. If the benefit of specialist treatment is uncertain, small markups for the specialist enhance welfare compared to a cost-based fee-for-service contract. We also consider how waiting costs for referrals affect our main results.

Keywords: physicians; referral; provider payment; moral hazard; altruism (search for similar items in EconPapers)
JEL-codes: D82 I18 M52 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (1)

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DOI: 10.1628/jite-2022-0006

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