Outcome versus service based payments in health care: lessons from African traditional healers
We compare the more common physician compensation method of fee-for-service to the less common payment-for-outcomes method. This paper combines an investigation of the theoretical properties of both of these payment regimes with a unique data set from rural Cameroon in which patients can choose between outcome and service based payments. We show that consideration of the role of patient effort in the production of health leads to important differences in the performance of these contracts. Theory and empirical evidence show that when illnesses require (or are responsive to) large amounts of both patient and practitioner effort, outcome based payment schemes are superior to effort based schemes. The traditional healer - a practitioner who offers health services on an outcome-contingent basis - is advanced as an important example of how patient effort can be better understood and tapped in health care. Copyright © 2004 John Wiley & Sons, Ltd.
Volume (Year): 14 (2005)
Issue (Month): 6 ()
|Contact details of provider:|| Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749|
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.:
- Gaynor, Martin, 1994.
"Issues in the Industrial Organization of the Market for Physician Services,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 3(1), pages 211-55, Spring.
- Martin Gaynor, 1994. "Issues in the Industrial Organization of the Market for Physician Services," NBER Working Papers 4695, National Bureau of Economic Research, Inc.
- Sanford Grossman & Oliver Hart, .
"An Analysis of the Principal-Agent Problem,"
Rodney L. White Center for Financial Research Working Papers
15-80, Wharton School Rodney L. White Center for Financial Research.
- Leonard, Kenneth L., 2003.
"African traditional healers and outcome-contingent contracts in health care,"
Journal of Development Economics,
Elsevier, vol. 71(1), pages 1-22, June.
- Leonard, K.L., 2000. "African Traditional Healers and Outcome-Contingent Contracts in Health Care," Discussion Papers 2000_03, Columbia University, Department of Economics.
- Bengt Holmstrom, 1981.
"Moral Hazard in Teams,"
471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Mwabu, Germano M., 1986. "Health care decisions at the household level: Results of a rural health survey in Kenya," Social Science & Medicine, Elsevier, vol. 22(3), pages 315-319, January.
- Grossman, Michael, 1972. "On the Concept of Health Capital and the Demand for Health," Journal of Political Economy, University of Chicago Press, vol. 80(2), pages 223-55, March-Apr.
- 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.
When requesting a correction, please mention this item's handle: RePEc:wly:hlthec:v:14:y:2005:i:6:p:575-593. 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: (Wiley-Blackwell Digital Licensing)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.