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Treatment and referral decisions under different physician payment mechanisms

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  • Marie Allard

    (HEC Montréal - HEC MONTRÉAL)

  • Izabela Jelovac

    (GATE Lyon Saint-Etienne - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - École Normale Supérieure de Lyon)

  • Pierre-Thomas Léger

    (HEC Montréal - HEC MONTRÉAL, CIRANO - Centre interuniversitaire de recherche en analyse des organisations - Université du Québec à Montréal, CIRPEE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi - Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi)

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.

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Bibliographic Info

Paper provided by HAL in its series Post-Print with number halshs-00650933.

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Date of creation: 2011
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Publication status: Published, Journal of Health Economics, 2011, 30, 5, pp. 880-893
Handle: RePEc:hal:journl:halshs-00650933

Note: View the original document on HAL open archive server: http://halshs.archives-ouvertes.fr/halshs-00650933/en/
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Keywords: physician payment mechanisms;

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References

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  1. Gary Biglaiser & Ching-to Albert Ma, 2007. "Moonlighting: public service and private practice," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1113-1133, December.
  2. Marinoso, Begona Garcia & Jelovac, Izabela, 2003. "GPs' payment contracts and their referral practice," Journal of Health Economics, Elsevier, vol. 22(4), pages 617-635, July.
  3. Marie Allard & Pierre Thomas Léger & Lise Rochaix, 2009. "Provider Competition in a Dynamic Setting," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(2), pages 457-486, 06.
  4. Blomqvist, Ake & Leger, Pierre Thomas, 2005. "Information asymmetry, insurance, and the decision to hospitalize," Journal of Health Economics, Elsevier, vol. 24(4), pages 775-793, July.
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  6. Jack, William, 2005. "Purchasing health care services from providers with unknown altruism," Journal of Health Economics, Elsevier, vol. 24(1), pages 73-93, January.
  7. Matsaganis, Manos & Glennerster, Howard, 1994. "The threat of 'cream skimming' in the post-reform NHS," Journal of Health Economics, Elsevier, vol. 13(1), pages 31-60, March.
  8. Blomqvist, Ake, 1991. "The doctor as double agent: Information asymmetry, health insurance, and medical care," Journal of Health Economics, Elsevier, vol. 10(4), pages 411-432.
  9. Ma, Ching-to Albert & McGuire, Thomas G, 1997. "Optimal Health Insurance and Provider Payment," American Economic Review, American Economic Association, vol. 87(4), pages 685-704, September.
  10. Brekke, Kurt R. & Nuscheler, Robert & Straume, Odd Rune, 2007. "Gatekeeping in health care," Journal of Health Economics, Elsevier, vol. 26(1), pages 149-170, January.
  11. Marie Allard & Izabela Jelovac & Pierre-Thomas Léger, 2010. "Physicians self selection of a payment mechanism: Capitation versus fee-for-service," Working Papers 1024, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  12. Paula González, 2010. "Gatekeeping versus direct-access when patient information matters," Health Economics, John Wiley & Sons, Ltd., vol. 19(6), pages 730-754.
  13. Josse Delfgaauw, 2007. "Dedicated Doctors: Public and Private Provision of Health Care with Altruistic Physicians," Tinbergen Institute Discussion Papers 07-010/1, Tinbergen Institute, revised 17 Sep 2007.
  14. Rosella LEVAGGI & Lise ROCHAIX, 2007. "Exit, Choice Or Loyalty: Patient Driven Competition In Primary Care," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 78(4), pages 501-535, December.
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Cited by:
  1. Iversen, Tor & Ma, Albert, 2009. "Market Conditions and General Practitioners’ Referrals," HERO On line Working Paper Series 2009:8, Oslo University, Health Economics Research Programme.
  2. Franz Hackl & Michael Hummer & Gerald Pruckner, 2013. "Old Boys’ Network in General Practitioner’s Referral Behavior," NRN working papers 2013-08, The Austrian Center for Labor Economics and the Analysis of the Welfare State, Johannes Kepler University Linz, Austria.
  3. Kesternich, Iris & Schumacher, Heiner & Winter, Joachim, 2014. "Professional norms and physician behavior: homo oeconomicus or homo hippocraticus?," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 456, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  4. Shinya Sugawara & Jiro Nakamura, 2014. "Incentive for Gatekeepers and Their Demand Inducement: An Empirical Analysis of Care Managers in the Japanese Long-Term Care Insurance," CIRJE F-Series CIRJE-F-916, CIRJE, Faculty of Economics, University of Tokyo.
  5. Marie Allard & Izabela Jelovac & Pierre-Thomas Léger, 2014. "Payment mechanism and GP self-selection: capitation versus fee for service," International Journal of Health Care Finance and Economics, Springer, vol. 14(2), pages 143-160, June.
  6. Godager, Geir & Iversen, Tor & Albert Ma, Ching-to, 2012. "Competition, Gatekeeping, and Health Care Access," HERO On line Working Paper Series 2012:2, Oslo University, Health Economics Research Programme.
  7. Marie Allard & Izabela Jelovac & Pierre-Thomas Léger, 2010. "Physicians self selection of a payment mechanism: Capitation versus fee-for-service," Post-Print halshs-00523370, HAL.
  8. Godager, Geir & Wiesen, Daniel, 2013. "Profit or patients’ health benefit? Exploring the heterogeneity in physician altruism," Journal of Health Economics, Elsevier, vol. 32(6), pages 1105-1116.

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