An Equilibrium Model of General Practitioner Payment Schemes
In an environment where GPs are of differing quality and heterogeneous patients have diﬀerent preferences for quality, it is shown that fee-for-service coupled with balance billing is a superior payment scheme to just fee-for-service or capitation payments as it generates an eﬃcient allocation of GPs between high and low quality and an eﬃcient allocation of patients between GPs. Where patients have more than one condition it is shown that fee-for-service allows patients to seek treatment from GPs of diﬀering quality conditional on the medical condition they have.
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