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Treatment and referral decisions under different physician payment mechanisms

  • 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)

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

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Date of creation: 2011
Date of revision:
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/
Contact details of provider: Web page: http://hal.archives-ouvertes.fr/

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  1. 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.
  2. 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.
  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. Brekke, Kurt R. & Nuscheler, Robert, 2003. "Gatekeeping in health care," Working Papers in Economics 10/03, University of Bergen, Department of Economics.
  5. Gary Biglaiser & Ching-to Albert Ma, 2006. "Moonlighting: Public Service and Private Practice," Boston University - Department of Economics - Working Papers Series WP2006-015, Boston University - Department of Economics.
  6. Paula González, 2010. "Gatekeeping versus direct-access when patient information matters," Health Economics, John Wiley & Sons, Ltd., vol. 19(6), pages 730-754.
  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. Jack, William, 2005. "Purchasing health care services from providers with unknown altruism," Journal of Health Economics, Elsevier, vol. 24(1), pages 73-93, January.
  9. 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.
  10. 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.
  11. 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.
  12. 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.
  13. Chalkley, Martin & Malcomson, James M., 1998. "Contracting for health services when patient demand does not reflect quality," Journal of Health Economics, Elsevier, vol. 17(1), pages 1-19, January.
  14. repec:dgr:uvatin:20070010 is not listed on IDEAS
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