IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Log in (now much improved!) to save this article

How payment systems affect physicians' provision behaviour--An experimental investigation

Listed author(s):
  • Hennig-Schmidt, Heike
  • Selten, Reinhard
  • Wiesen, Daniel

Abstract Understanding how physicians respond to incentives from payment schemes is a central concern in health economics research. We introduce a controlled laboratory experiment to analyse the influence of incentives from fee-for-service and capitation payments on physicians' supply of medical services. In our experiment, physicians choose quantities of medical services for patients with different states of health. We find that physicians provide significantly more services under fee-for-service than under capitation. Patients are overserved under fee-for-service and underserved under capitation. However, payment incentives are not the only motivation for physicians' quantity choices, as patients' health benefits are of considerable importance as well. We find that patients in need of a high (low) level of medical services receive larger health benefits under fee-for-service (capitation).

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://www.sciencedirect.com/science/article/pii/S0167629611000452
Download Restriction: Full text for ScienceDirect subscribers only

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.

Article provided by Elsevier in its journal Journal of Health Economics.

Volume (Year): 30 (2011)
Issue (Month): 4 (July)
Pages: 637-646

as
in new window

Handle: RePEc:eee:jhecon:v:30:y:2011:i:4:p:637-646
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505560

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as
in new window

  1. Fischbacher, Urs & Gachter, Simon & Fehr, Ernst, 2001. "Are people conditionally cooperative? Evidence from a public goods experiment," Economics Letters, Elsevier, vol. 71(3), pages 397-404, June.
  2. Tor Iversen & Hilde Lurås, 2000. "The effect of capitation on GPs' referral decisions," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 199-210.
  3. Robin Cubitt & Michalis Drouvelis & Simon Gaechter & Ruslan Kabalin, 2009. "Moral Judgments in Social Dilemmas: How Bad is Free Riding?," Discussion Papers 2009-15, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  4. Armin Falk & Stephan Meier & Christian Zehnder, 2010. "Did we Overestimate the Role of Social Preferences? The Case of Self-Selected Student Samples," CESifo Working Paper Series 3177, CESifo Group Munich.
  5. Selten, Reinhard & Ockenfels, Axel, 1998. "An experimental solidarity game," Journal of Economic Behavior & Organization, Elsevier, vol. 34(4), pages 517-539, March.
  6. Ching-to Albert Ma, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Papers 0047, Boston University - Industry Studies Programme.
  7. Eckel, Catherine C. & Grossman, Philip J., 1996. "Altruism in Anonymous Dictator Games," Games and Economic Behavior, Elsevier, vol. 16(2), pages 181-191, October.
  8. Falk, Armin & Fehr, Ernst, 2003. "Why labour market experiments?," Labour Economics, Elsevier, vol. 10(4), pages 399-406, August.
  9. Dumont, Etienne & Fortin, Bernard & Jacquemet, Nicolas & Shearer, Bruce S., 2007. "Physicians' Multitasking and Incentives: Empirical Evidence from a Natural Experiment," IZA Discussion Papers 3229, Institute for the Study of Labor (IZA).
  10. Falk, Armin & Heckman, James J., 2009. "Lab Experiments Are a Major Source of Knowledge in the Social Sciences," IZA Discussion Papers 4540, Institute for the Study of Labor (IZA).
  11. 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.
  12. Selden, Thomas M., 1990. "A model of capitation," Journal of Health Economics, Elsevier, vol. 9(4), pages 397-409, December.
  13. Ellis, Randall P. & McGuire, Thomas G., 1990. "Optimal payment systems for health services," Journal of Health Economics, Elsevier, vol. 9(4), pages 375-396, December.
  14. Barros, Pedro Pita, 2003. "Cream-skimming, incentives for efficiency and payment system," Journal of Health Economics, Elsevier, vol. 22(3), pages 419-443, May.
  15. Iversen, Tor, 1993. "A theory of hospital waiting lists," Journal of Health Economics, Elsevier, vol. 12(1), pages 55-71, April.
  16. Jack, William, 2005. "Purchasing health care services from providers with unknown altruism," Journal of Health Economics, Elsevier, vol. 24(1), pages 73-93, January.
  17. B Hutchison & S Birch & J Hurley & J Lomas & F Stratford-Devai, 1994. "Do Physician Payment Mechanisms Affect Hospital Utilization? A Study of Health Service Organizations in Ontario," Centre for Health Economics and Policy Analysis Working Paper Series 1994-02, Centre for Health Economics and Policy Analysis (CHEPA), McMaster University, Hamilton, Canada.
  18. Gaynor, Martin & Pauly, Mark V, 1990. "Compensation and Productive Efficiency of Partnerships: Evidence from Medical Group Practice," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 544-573, June.
  19. J Hurley & R Labelle, 1994. "Relative Fees and the Utilization of Physicians' Services in Canada," Centre for Health Economics and Policy Analysis Working Paper Series 1994-06, Centre for Health Economics and Policy Analysis (CHEPA), McMaster University, Hamilton, Canada.
  20. Fuchs, Victor R., 2000. "The future of health economics1," Journal of Health Economics, Elsevier, vol. 19(2), pages 141-157, March.
  21. Fan, Chinn-Ping & Chen, Kong-Pin & Kan, Kamhon, 1998. "The design of payment systems for physicians under global budget - an experimental study," Journal of Economic Behavior & Organization, Elsevier, vol. 34(2), pages 295-311, February.
  22. Pauly, Mark V, 1990. "The Rational Nonpurchase of Long-term-Care Insurance," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 153-168, February.
  23. Gaynor, M. & Gertler, P., 1996. "Moral hazard and Risk Speading in Partnerships," Papers 96-09, RAND - Reprint Series.
  24. Ching-to Albert Ma & Michael Riordan, 1997. "Health Insurance, Moral Hazard, and Managed Care," Papers 0080, Boston University - Industry Studies Programme.
  25. Joseph P. Newhouse, 1996. "Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1236-1263, September.
  26. Sorensen, Rune J. & Grytten, Jostein, 2003. "Service production and contract choice in primary physician services," Health Policy, Elsevier, vol. 66(1), pages 73-93, October.
  27. Chalkley, M. & Malcomson, J.M., 1995. "Contracting for health services when patient demand does not reflect quality," Discussion Paper Series In Economics And Econometrics 9514, Economics Division, School of Social Sciences, University of Southampton.
  28. Manning, Willard G, et al, 1987. "Health Insurance and the Demand for Medical Care: Evidence from a Randomized Experiment," American Economic Review, American Economic Association, vol. 77(3), pages 251-277, June.
  29. McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
  30. Croxson, B. & Propper, C. & Perkins, A., 2001. "Do doctors respond to financial incentives? UK family doctors and the GP fundholder scheme," Journal of Public Economics, Elsevier, vol. 79(2), pages 375-398, February.
  31. Grytten, Jostein & Sorensen, Rune, 2001. "Type of contract and supplier-induced demand for primary physicians in Norway," Journal of Health Economics, Elsevier, vol. 20(3), pages 379-393, May.
  32. Olivella, Pau & Vera-Hernandez, Marcos, 2007. "Competition among differentiated health plans under adverse selection," Journal of Health Economics, Elsevier, vol. 26(2), pages 233-250, March.
  33. De Jaegher, Kris & Jegers, Marc, 2000. "A model of physician behaviour with demand inducement," Journal of Health Economics, Elsevier, vol. 19(2), pages 231-258, March.
  34. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
  35. Jostein Grytten & Dorthe Holst & Irene Skau, 2009. "Incentives and remuneration systems in dental services," International Journal of Health Economics and Management, Springer, vol. 9(3), pages 259-278, September.
  36. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  37. Devlin, Rose Anne & Sarma, Sisira, 2008. "Do physician remuneration schemes matter? The case of Canadian family physicians," Journal of Health Economics, Elsevier, vol. 27(5), pages 1168-1181, September.
Full references (including those not matched with items on IDEAS)

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

When requesting a correction, please mention this item's handle: RePEc:eee:jhecon:v:30:y:2011:i:4:p:637-646. 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: (Dana Niculescu)

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.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.