Custom-made health-care: an experimental investigation

Abstract

Background Physicians’ financial interests might conflict with the best service to patients. It is essential to gain a thorough understanding of the effect of remuneration systems on physician behaviour. Methods We conducted a controlled laboratory experiment using a within-subject design to investigate physician behaviour underpayment heterogeneity. Each physician provided medical care to patients whose treatments were paid for under fee-for-service (FFS) or capitation (CAP). Results We observed that physicians customized their care in response to the payment system. FFS patients received considerably more medical care than did CAP patients with the same illness and treatment preference. Physicians over-served FFS patients and under-served CAP patients. After a CAP payment reduction, we observed neither a quantity reduction under CAP nor a spillover in FFS patients’ treatment. Conclusions The results suggest that, in our experimental model, fee regulation can be used to some extent to control physician spending since we did not identify a behavioural response to the CAP payment cut. Physicians did not recoup lost income by altering treatment behaviour toward CAP and/or FFS patients. Experimental economics is an excellent tool for ensuring the welfare of all those involved in the health system. Further research should investigate payment incentives as a means of developing health care teams that are more efficient.

Effects of fee-for-service, diagnosis-related-group, and mixed payment systems on physicians’ medical service behavior: experimental evidence

“…When patients have higher disease severity, retrospective payments or mixed systems based predominantly on retrospective payments are better. Third, the data showed that a decrease in payment level did not significantly influence physicians’ behavior and patients’ benefit; this agreed with Brosig-Koch et al [ 27 ] and Keser et al [ 39 ]. This means it is possible to control health expenditures by designing mixed payment schemes that decrease remuneration for physicians.…”

Payment Systems, Supplier-Induced Demand, and Service Quality in Credence Goods: Results from a Laboratory Experiment

“…However, we also observed that customers who require additional effort are often underserved by providers under the salaried system. Unlike previous studies [21,29], we are hesitant to claim that customers in need of intermediate or extensive attention are better served under an FFS system than under a salary. While it may seem that the number of tasks completed is the primary metric for evaluation, the quality of those tasks is just as important.…”

“…On a similar note, Brosig-Koch et al [22] show over-provision to be widespread under FFS and under-provision to be common under capitation. Keser and colleagues [29], using an experimental model similar to that of Hennig-Schmidt et al [21], look at whether physicians customize care in response to financial incentives at the individual patient level. They found that patients treated in the FFS system receive considerably more medical care than patients under CAP with similar illnesses and treatment preferences.…”

Physician Behavior and Health Outcomes

“…Conversely, patients were more likely to receive fewer services than optimal under capitation. Other experiments have produced qualitatively similar results even when varying financial incentives and recruited subjects' characteristics (Godager et al 2016, Brosig-Koch et al 2016, Lagarde & Blaauw 2017, Keser et al 2020, Wang et al 2020.…”