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The treadmill effect in a fixed budget system

  • We examine the interaction in the market for physician services when the total budget for reimbursement is fixed. Physicians obtain points for the services they render. At the end of the period the budget is divided by the sum of all points submitted, which determines the price per point. We show that this retrospective payment system involves – compared to a fee-for-service remuneration system – a severe coordination problem, which potentially leads to the “treadmill effect”. We argue that when market entry is possible, a budget can be efficiency enhancing, if in addition a price floor is used.

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Metadaten
Author:Franz Benstetter, Achim Wambach
URL:https://doi.org/10.1016/j.jhealeco.2005.04.004
Parent Title (English):Journal of Health Economics
Document Type:Article (peer reviewed)
Language:English
Publication Year:2006
Tag:Coordination device; Health economics; Remuneration systems; Supplier-induced demand
Volume:25
Issue:1
First Page:146
Last Page:169
Peer reviewed:Ja
faculties / departments:Fakultät für Angewandte Gesundheits- und Sozialwissenschaften