Physicians Self Selection of a Payment Mechanism: Capitation versus Fee-for-Service

GATE Working Paper No. 1024

22 Pages Posted: 5 Oct 2010

See all articles by Marie Allard

Marie Allard

HEC Montreal - Institute of Applied Economics

Izabela Jelovac

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE)

Pierre Thomas Leger

HEC Montréal, CIRANO and CIRPÉE

Date Written: October 1, 2010

Abstract

The main question raised in this paper is whether GPs should self select their payment mechanism or not. To answer it, we model GPs’ behavior under the most common payment schemes (capitation and fee-for-service) and when GPs can select one among those. Our analysis considers GPs heterogeneity in terms of both ability and sense of professional duty. We conclude that when savings on specialists costs are the main concern of a regulator, GPs should be paid on a fee-for-service basis. Instead, when failures to identify severe conditions are the main concern, then payment self selection by GPs can be optimal.

Keywords: GPs, gatekeeping, payment scheme, self selection, ability, professional duty

JEL Classification: I18, J33

Suggested Citation

Allard, Marie and Jelovac, Izabela and Leger, Pierre Thomas, Physicians Self Selection of a Payment Mechanism: Capitation versus Fee-for-Service (October 1, 2010). GATE Working Paper No. 1024, Available at SSRN: https://ssrn.com/abstract=1687530 or http://dx.doi.org/10.2139/ssrn.1687530

Marie Allard (Contact Author)

HEC Montreal - Institute of Applied Economics ( email )

3000, ch. de la Côte-Ste-Catherine
Montréal, Quebec H3T 2A7
Canada

Izabela Jelovac

University of Lyon 2 - Groupe d'Analyse et de Théorie Economique (GATE) ( email )

93, chemin des Mouilles
Ecully, 69130
France

Pierre Thomas Leger

HEC Montréal, CIRANO and CIRPÉE ( email )

3000, ch. de la Côte-Ste-Catherine
Montréal, Quebec H3T 2A7
Canada

HOME PAGE: http://www.hec.ca/pages/pierre-thomas.leger

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