Advanced Search
MyIDEAS: Login

The Ethics and Economics of Kickbacks and Fee Splitting

Contents:

Author Info

  • Mark V. Pauly
Registered author(s):

    Abstract

    This paper examines the welfare effects of fee splitting or kickbacks paid by one physician to another in return for patient referrals. This practice is regarded as unethical and illegal in most cases, but it is shown that in a principal-agent context it is possible for fee splitting to offer incentives which actually improve patient welfare. Fee splitting occurs when there is a divergence between price and the referral partner's marginal opportunity cost. A restructuring of fee levels to yield physicians equal net income per unit time would remove the incentive for fee splitting. In the absence of this reform it is shown that fee splitting may induce the first-contact physician to refer instead of performing a lower quality procedure himself, and can also be a tool for eroding specialist monopoly power.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://links.jstor.org/sici?sici=0361-915X%28197921%2910%3A1%3C344%3ATEAEOK%3E2.0.CO%3B2-8&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.

    As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

    Bibliographic Info

    Article provided by The RAND Corporation in its journal Bell Journal of Economics.

    Volume (Year): 10 (1979)
    Issue (Month): 1 (Spring)
    Pages: 344-352

    as in new window
    Handle: RePEc:rje:bellje:v:10:y:1979:i:spring:p:344-352

    Contact details of provider:
    Web page: http://www.rje.org

    Order Information:
    Web: https://editorialexpress.com/cgi-bin/rje_online.cgi

    Related research

    Keywords:

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Maria Arbatskaya & Hideo Konishi, 2005. "Referrals in Search Markets," Emory Economics 0521, Department of Economics, Emory University (Atlanta).
    2. Christopher C. Afendulis & Daniel P. Kessler, 2006. "Tradeoffs from Integrating Diagnosis and Treatment in Markets for Health Care," NBER Working Papers 12623, National Bureau of Economic Research, Inc.
    3. Roman Inderst & Marco Ottaviani, 2012. "Competition through Commissions and Kickbacks," American Economic Review, American Economic Association, vol. 102(2), pages 780-809, April.
    4. Lee, Frances (Zhiyun Xu), 2013. "Trading between agents for a better match," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 501-515.
    5. Christopher Afendulis & Daniel Kessler, 2011. "Vertical Integration and Optimal Reimbursement Policy," NBER Working Papers 17316, National Bureau of Economic Research, Inc.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:rje:bellje:v:10:y:1979:i:spring:p:344-352. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.