Health policy
-
Comparative Study
Service production and contract choice in primary physician services.
Since payment systems for physicians may affect the efficiency of health care service provision, the design of compensation schemes is a major policy concern. According to standard labour economics and agency theory, fee-for-service contracts are likely to induce higher service production than salary contracts and (pure) capitation contracts. Payment systems may also influence service quality and the overall cost control. ⋯ This difference is mostly due to longer working hours, but time efficiency is greater as well. Moreover, a part of the difference is due to a selection effect: salaried physicians prefer shorter working hours and prefer to work less intensively. When these and other effects are taken into account, we find that a change from a salary contract to a fee-for-service contract will increase service production by 20-40%.