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How to Improve Patient Care? – An Analysis of Capitation, Fee-for-Service, and Mixed Payment Schemes for Physicians

  • Jeannette Brosig-Koch

    ()

  • Heike Hennig-Schmidt
  • Nadja Kairies
  • Daniel Wiesen

In recent health care reforms, several countries have replaced pure payment schemes for physicians (fee-for-service, capitation) by so-called mixed payment schemes. Until now it is still an unresolved issue whether patients are really better off after these reforms. In this study we compare the effects resulting from pure and mixed incentives for physicians under controlled laboratory conditions. Subjects in the role of physicians choose the quantity of medical services for different patient types. Real patients gain a monetary benefit from subjects’ decisions. Our results reveal that overprovision observed in fee-for-service schemes and underprovision observed in capitation schemes can, in fact, be reduced by mixed incentives. Interestingly, even the presentation of pure incentives as mixed incentives already significantly affects physicians’ behavior. Moreover, the mixed payment schemes generally provide a higher benefit-remuneration ratio than the respective pure payment schemes. Our findings provide some valuable insights for designing health care reforms.

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Paper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0412.

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Length: 34 pages
Date of creation: May 2013
Date of revision:
Handle: RePEc:rwi:repape:0412
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  1. Etienne Dumont & Bernard Fortin & Nicolas Jacquemet & Bruce Shearer, 2007. "Physicians' Multitasking and Incentives: Empirical Evidence from a Natural Experiment," Cahiers de recherche 0745, CIRPEE.
  2. Hennig-Schmidt, Heike & Selten, Reinhard & Wiesen, Daniel, 2011. "How payment systems affect physicians' provision behaviour--An experimental investigation," Journal of Health Economics, Elsevier, vol. 30(4), pages 637-646, July.
  3. Grytten, Jostein & Sorensen, Rune, 2001. "Type of contract and supplier-induced demand for primary physicians in Norway," Journal of Health Economics, Elsevier, vol. 20(3), pages 379-393, May.
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  9. Camerer, Colin F & Hogarth, Robin M, 1999. "The Effects of Financial Incentives in Experiments: A Review and Capital-Labor-Production Framework," Journal of Risk and Uncertainty, Springer, vol. 19(1-3), pages 7-42, December.
  10. Tanjim Hossain & John A. List, 2009. "The Behavioralist Visits the Factory: Increasing Productivity Using Simple Framing Manipulations," NBER Working Papers 15623, National Bureau of Economic Research, Inc.
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  12. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  13. Tor Iversen & Hilde Lurås, 2000. "The effect of capitation on GPs' referral decisions," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 199-210.
  14. Fuchs, Victor R., 2000. "The future of health economics1," Journal of Health Economics, Elsevier, vol. 19(2), pages 141-157, March.
  15. Eckel, Catherine C. & Grossman, Philip J., 1996. "Altruism in Anonymous Dictator Games," Games and Economic Behavior, Elsevier, vol. 16(2), pages 181-191, October.
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  17. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
  18. Florian Englmaier & Andreas Roider & Uwe Sunde, 2012. "The Role of Salience in Performance Schemes: Evidence from a Field Experiment," CESifo Working Paper Series 3771, CESifo Group Munich.
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