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Payment mechanism and GP self-selection: capitation versus fee for service

Author

Listed:
  • Marie Allard

    (HEC Montréal - HEC Montréal)

  • Izabela Jelovac

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - Université de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Pierre-Thomas Léger

    (HEC Montréal - HEC Montréal, CIRANO - Centre interuniversitaire de recherche en analyse des organisations [Montréal, Canada] = Center for Interuniversity Research and Analysis on Organizations [Montréal, Canada], CIRPEE - Centre interuniversitaire sur le risque, les politiques économiques et l'emploi - Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi)

Abstract

This paper analyzes the consequences of allowing gatekeeping general practitioners (GPs) to select their payment mechanism. We model GPs’ behavior under the most common payment schemes (capitation and fee for service) and when GPs can select one among them. Our analysis considers GP heterogeneity in terms of both ability and concern for their patients’ health. We show that when the costs of wasteful referrals to costly specialized care are relatively high, fee for service payments are optimal to maximize the expected patients’ health net of treatment costs. Conversely, when the losses associated with failed referrals of severely ill patients are relatively high, we show that either GPs’ self-selection of a payment form or capitation is optimal. Last, we extend our analysis to endogenous effort and to competition among GPs. In both cases, we show that self-selection is never optimal. Copyright Springer Science+Business Media New York 2014
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Marie Allard & Izabela Jelovac & Pierre-Thomas Léger, 2014. "Payment mechanism and GP self-selection: capitation versus fee for service," Post-Print halshs-00968734, HAL.
    • Handle: RePEc:hal:journl:halshs-00968734
    DOI: 10.1007/s10754-014-9143-z
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    Cited by:

    1. Izabela Jelovac & Philippe Polomé, 2017. "Incentives to patients versus incentives to health care providers: The users' perspective," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 319-331, December.
    2. Jasmin Kantarevic & Boris Kralj, 2016. "Physician Payment Contracts in the Presence of Moral Hazard and Adverse Selection: The Theory and Its Application in Ontario," Health Economics, John Wiley & Sons, Ltd., vol. 25(10), pages 1326-1340, October.
    3. Yaping Wu & David Bardey & Yijuan Chen & Sanxi Li, 2021. "Health care insurance policies When the provider and patient may collude," Health Economics, John Wiley & Sons, Ltd., vol. 30(3), pages 525-543, March.
    4. Waibel, Christian & Wiesen, Daniel, 2021. "An experiment on referrals in health care," European Economic Review, Elsevier, vol. 131(C).
    5. Yanmei Wang & Zhiqun Shu & Jianjun Gu & Xiaoming Sun & Limei Jing & Jie Bai & Xuan Huang & Jiquan Lou & Qunfang Zhang & Ming Li, 2017. "Evidence for capitation reform in a New Rural Cooperative Medical Scheme in Pudong New Area, Shanghai: A longitudinal study," International Journal of Health Planning and Management, Wiley Blackwell, vol. 32(3), pages 307-316, July.

    More about this item

    Keywords

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    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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