Professional reimbursement and professional behavior: emerging issues and research challenges

Abstract

The decisions and actions of health care professionals have a major impact on such health care outcomes as cost, quality and equity. It is widely believed that professional behavior is determined, in part by how and how much they are paid. Professionals can respond to reimbursement incentives at both the individual level (treatment decisions, referral patterns, specialty choice, etc.) and at the level of the professional association. Health care analysts usually identify and discuss three principal reimbursement modes: salary, capitation, and fee-for-service. Mixed systems are proliferating and need to be evaluated. Payment levels are determined by a mix of equity, market, and political considerations. They are believed by many to influence the behavior of providers, who are thought to act so as to preserve target incomes. The target income hypothesis has been tested for the case of physicians operating in a fee-for-service environment. The impact of changes in reimbursement levels on the behavior of other groups of professionals and on the behavior of professionals working in other reimbursement modes remains unclear. Both policy-makers and researchers need to broaden the way in which they think about professional reimbursement. To date, the field has been dominated by economists, inquiry has focused heavily on physicians, and empirical work has emphasized those dimensions of outcome which are most easily measured. Changes in the organization of health services and in society-at-large intensify the need for a broader view.