Diagnostics and Treatment: On the Division of Labor between Primary Care Physicians and Specialists

Abstract

Highlights-We study referrals between a PCP and a specialist.-Optimal payment system calls for markup for either immediate PCP treatment or for the specialist when she refers patients back to the PCP.-Markups for the specialist may be superior because of better rent efficiency.

Contracts for Primary and Secondary Care Physicians and Equity-Efficiency Trade-Offs

“…These studies derive optimal payment systems that simultaneously induce GPs to exert diagnostic effort and give incentives for efficient referral or treatment decisions, and discuss whether a gatekeeping system dominates free access to secondary care. Griebenow and Kifmann (2021) investigate the referral processes between a gatekeeping GP and a specialist when diagnostic signals are private information of the physicians. They show that welfare-maximising optimal contracts involve a markup either to the GP for treating patients without referral, or to the specialist for referring patients back to the GP.…”