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Custom-made healthcare: An experimental investigation

Author

Listed:
  • Keser, Claudia
  • Montmarquette, Claude
  • Schmidt, Martin
  • Schnitzler, Cornelius
Abstract
In this paper, we investigate in a controlled laboratory experiment physician behavior in the case of payment heterogeneity. In the experiment, each physician provides medical care to patients whose treatments are paid for either under fee-for-service (FFS) or capitation (CAP). We observe that physicians customize care in response to the payment system. A FFS patient receives considerably more medical care than the corresponding CAP patient with the same illness and treatment preference. Physicians over-serve FFS patients and under-serve CAP patients. After a CAP payment reduction in the experiment we observe neither a quantity reduction under CAP nor a spillover into the treatment of FFS patients.

Suggested Citation

  • Keser, Claudia & Montmarquette, Claude & Schmidt, Martin & Schnitzler, Cornelius, 2014. "Custom-made healthcare: An experimental investigation," University of Göttingen Working Papers in Economics 218, University of Goettingen, Department of Economics.
    • Handle: RePEc:zbw:cegedp:218
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    References listed on IDEAS

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Chris Sampson’s journal round-up for 11th January 2021
      by Chris Sampson in The Academic Health Economists' Blog on 2021-01-11 12:00:06

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    Cited by:

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    2. Huck, Steffen & Lünser, Gabriele & Spitzer, Florian & Tyran, Jean-Robert, 2016. "Medical insurance and free choice of physician shape patient overtreatment: A laboratory experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 131(PB), pages 78-105.
    3. Atehortua, S & Rodríguez-Valencia, A, 2021. "Physician s Allocation Preferences under Scarcity and Uncertainty," Documentos de Trabajo 19665, Universidad del Rosario.
    4. Godager , Geir & Scott, Anthony, 2023. "Physician Behavior and Health Outcomes," HERO Online Working Paper Series 2023:3, University of Oslo, Health Economics Research Programme.
    5. Wang, Jian & Iversen, Tor & Hennig-Schmidt, Heike & Godager, Geir, 2020. "Are patient-regarding preferences stable? Evidence from a laboratory experiment with physicians and medical students from different countries," European Economic Review, Elsevier, vol. 125(C).
    6. Manela Karunadasa & Katri K. Sieberg & Toni Tapani Kristian Jantunen, 2023. "Payment Systems, Supplier-Induced Demand, and Service Quality in Credence Goods: Results from a Laboratory Experiment," Games, MDPI, vol. 14(3), pages 1-31, May.
    7. Finocchiaro Castro, Massimo & Guccio, Calogero & Romeo, Domenica, 2022. "A systematic literature review of 10 years of behavioral research on health services," EconStor Preprints 266248, ZBW - Leibniz Information Centre for Economics.
    8. Manela Karunadasa & Katri K. Sieberg, 2024. "Payment Systems, Insurance, and Agency Problems in Healthcare: A Medically Framed Real-Effort Experiment," Games, MDPI, vol. 15(4), pages 1-23, June.
    9. Wang, Jian & Iversen, Tor & Hennig-Schmidt, Heike & Godager, Geir, 2017. "How Changes in Payment Schemes Influence Provision Behavior," HERO Online Working Paper Series 2017:2, University of Oslo, Health Economics Research Programme.

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    More about this item

    Keywords

    experimental economics; physician reimbursement; capitation; Fee-For-Service; customization; fee regulation;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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