How to Compensate Physicians When Both Patient and Physician Effort Are Unobservable
- How to Compensate Physicians When Both Patient and Physician Effort Are Unobservable
- Leonard, Kenneth L.
- Working papers
Health Policy and Management
- Persistent URL:
- Department of Economics Discussion Papers
- Part Number:
- Department of Economics, Columbia University
- Publisher Location:
- New York
- In this paper, we construct a joint production model of health with two sided asymmetric information and ask the question, "How should physicians be compensated?" We demonstrate theoretically that the preferred physician compensation scheme depends on the illness condition. Outcome-contingent payments are better than effort-contingent payments for illnesses in which the efforts of physicians and patients are highly complementary, or in which both types of effort are important to the outcome. Effort-contingent payments are superior when efforts are not highly complementary, or when either physician or patient effort, but not both are important to the outcome. Evidence to support this theory is provided by an empirical analysis of patient choice of health care providers in Africa
- Item views
text | xml
- Suggested Citation:
- Kenneth L. Leonard, Joshua Zivin, 2000, How to Compensate Physicians When Both Patient and Physician Effort Are Unobservable, Columbia University Academic Commons, http://hdl.handle.net/10022/AC:P:15743.