Health economics
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Comparative Study
Operating on commission: analyzing how physician financial incentives affect surgery rates.
This paper employs a nationally representative, household-based dataset in order to test how the compensation method of both the specialists and the primary care providers affects surgery rates. After controlling for adverse selection, I find that when specialists are paid through a fee-for-system scheme rather than on a capitation basis, surgery rates increase 78%. The impact of primary care physician compensation on surgery rates depends on whether or not referral restrictions are present.