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

Author

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  • Malte Griebenow
  • Mathias Kifmann

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.

Suggested Citation

  • Malte Griebenow & Mathias Kifmann, 2022. "Diagnostics and Treatment: On the Division of Labor between Primary Care Physicians and Specialists," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 178(2), pages 191-229.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2022-0006
    DOI: 10.1628/jite-2022-0006
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    Cited by:

    1. Griebenow, Malte, 2023. "Should physicians team up to treat chronic diseases?," Journal of Health Economics, Elsevier, vol. 89(C).

    More about this item

    Keywords

    physicians; referral; provider payment; moral hazard; altruism;
    All these keywords.

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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