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Physicians' payment contracts, treatment decisions and diagnosis accuracy

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  • Izabela Jelovac

Abstract

We derive optimal payment contracts for physicians when neither physicians' effort to gather information about the patient's health condition (diagnosis effort) nor the actual patient's health condition (physicians' private information) are contractible. In a model where the patient is allowed to demand health care on more than one occasion, we show that, in general, the optimal payment contract includes supply‐side cost sharing. This provides the physician with incentives to provide the most adequate treatment and to gather an informative signal about the patient's illness, to decrease the likelihood of future cost sharing. However, for some extreme values of the parameters of the model, we show that a public insurer may prefer to induce some ‘blind’ decision making. Copyright © 2001 John Wiley & Sons, Ltd.

Suggested Citation

  • Izabela Jelovac, 2001. "Physicians' payment contracts, treatment decisions and diagnosis accuracy," Health Economics, John Wiley & Sons, Ltd., vol. 10(1), pages 9-25, January.
    • Handle: RePEc:wly:hlthec:v:10:y:2001:i:1:p:9-25
    DOI: 10.1002/1099-1050(200101)10:1<9::AID-HEC560>3.0.CO;2-Y
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    References listed on IDEAS

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    Cited by:

    1. F. Barigozzi & R. Levaggi, 2005. "New Developments in Physician Agency: the Role of Patient Information," Working Papers 550, Dipartimento Scienze Economiche, Universita' di Bologna.
    2. Begoña García Mariñoso & Izabela Jelovac, 2000. "GPs’ Payment Contracts and their Referral Policy," Documentos de trabajo - Analise Economica 0010, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
    3. Jelovac, Izabela & Macho-Stadler, Ines, 2002. "Comparing organizational structures in health services," Journal of Economic Behavior & Organization, Elsevier, vol. 49(4), pages 501-522, December.
    4. Paula González, 2004. "Should physicians' dual practice be limited? An incentive approach," Health Economics, John Wiley & Sons, Ltd., vol. 13(6), pages 505-524, June.
    5. Filippini, M. & Heimsch, F. & Masiero, G., 2014. "Antibiotic consumption and the role of dispensing physicians," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 242-251.
    6. Massimo Filippini & Giuliano Masiero & Karine Moschetti, 2008. "Dispensing practices and antibiotic use," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 0808, USI Università della Svizzera italiana.
    7. 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.
    8. Lim, Jae-Young & Jo, Changik, 2009. "The Effect of Patient's Asymmetric Information Problem on Medical Care Utilization with Consideration of a Patient's Ex-ante Health Status," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 50(2), pages 37-58, December.
    9. Olga Milliken & Rose Anne Devlin & Vicky Barham & William Hogg & Simone Dahrouge & Grant Russell, 2008. "Comparative Efficiency Assessment of Primary Care Models Using Data Envelopment Analysis," Working Papers 0802E, University of Ottawa, Department of Economics.
    10. Barigozzi, Francesca & Levaggi, Rosella, 2008. "Emotions in physician agency," Health Policy, Elsevier, vol. 88(1), pages 1-14, October.
    11. Massimo Filippini & Giuliano Masiero & Karine Moschetti, 2009. "Physician dispensing and antibiotic prescriptions," Quaderni della facoltà di Scienze economiche dell'Università di Lugano 0908, USI Università della Svizzera italiana.
    12. GONZALEZ, Paula, 2003. "The "gatekeeping" role of general practitioners. Does patients' information matter ?," LIDAM Discussion Papers CORE 2003089, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    13. 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.
    14. Jae-Young Lim, 2009. "The effect of communication between doctor and patient on patient's medical care use," Applied Economics Letters, Taylor & Francis Journals, vol. 16(13), pages 1369-1374.
    15. Udo Schneider, 2005. "Asymmetric Information and Outcome-based Compensation in Health Care – Theoretical Implications," HEW 0501006, University Library of Munich, Germany.
    16. Schuster, Stephan, 2012. "Applications in Agent-Based Computational Economics," MPRA Paper 47201, University Library of Munich, Germany.

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