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Incentives and Choice in Health Care$
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Frank A. Sloan and Hirschel Kasper

Print publication date: 2008

Print ISBN-13: 9780262195775

Published to MIT Press Scholarship Online: August 2013

DOI: 10.7551/mitpress/9780262195775.001.0001

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Physician Fees and Behavior: Implications for Structuring a Fee Schedule

Physician Fees and Behavior: Implications for Structuring a Fee Schedule

(p.263) 10 Physician Fees and Behavior: Implications for Structuring a Fee Schedule
Incentives and Choice in Health Care

Thomas G. McGuire

The MIT Press

This chapter examines physician fees and behavior and their implications for structuring a fee schedule. It discusses one of the major controversies in health economics: whether standard models apply to the physician market, or alternatively, whether physicians can and do induce demand for their products. It then considers a pricing system wherein a patient’s doctor would receive a fixed payment per period (for example, per month) for rendering services to that patient. In addition, however, the doctor would be paid less than the marginal cost for surgery. At least in theory, this approach would guarantee the patient’s adequate access to physicians’ services, but would discourage the doctor from recommending the surgical procedure. The chapter first comments on setting fees in markets versus setting fees by regulation. It then reviews the literature on physician behavior toward fees and discusses target income as well as physician-induced demand.

Keywords:   physician fees, fee schedule, physicians, health economics, pricing, payment, physician behavior, regulation, target income, physician-induced demand

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