Munich Personal RePEc Archive

Optimal mixed payment system and medical liability. A laboratory study

Finocchiaro Castro, Massimo and Ferrara, Paolo Lorenzo and Guccio, Calogero and Lisi, Domenico (2021): Optimal mixed payment system and medical liability. A laboratory study.

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Abstract

In a controlled laboratory environment, we test the role of medical malpractice liability on physicians’ service provision under fee-for-service, capitation, and mixed payment. We find that the introduction of medical liability causes a significant deviation from patient-optimal treatment that it is not mitigated by the use of a standard mixed payment system. Specifically, we find that the presence of medical liability pressure involves a proper optimal calibration of mixed payment system. Our findings have relevant policy implications for the correct calibration and implementation of the mixed payment system.

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