Traditionally, doctors have been paid on a fee-for-service basis. Now doctors are increasingly paid on a capitated basis (they get paid for treating a patient for a year, regardless of how much treatment is required), though a patient may still have to pay a small fee each visit. In this arrangement, doctors form a group and sign a capitation contract whereby they take turns seeing a given patient. What are the implications of this change in compensation for moral hazard and for risk bearing?
Answer to relevant QuestionsAccording to a flyer from Schwab Advisor- Source, “Most personal investment managers base their fees on a percentage of assets managed. We believe this is in your best interest because your manager is paid for investment ...Suppose now that the publisher in Question 4.6 faces a downward- sloping demand curve. The revenue is R(Q), and the publisher’s cost of printing and distributing the book is C(Q). Compare the equilibria for the following ...In the Managerial Solution, show that shareholders’ expected earnings are higher with the new compensation scheme than with the original one. The price of wholesale milk dropped by 30.3% when the Pennsylvania Milk Marketing Board lowered the regulated price. The price to consumers fell by substantially less than 30.3% in Philadelphia. Why?To the dismay of business travelers, airlines now discretely cater to families with young children who fly in first class (Katherine Rosman, “Frequent Criers,” Wall Street Journal, May 20, 2005, W1). Suppose the ...
Post your question