Question: Traditionally doctors have been paid on a fee for service basis Now
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?
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