Competition between General Practitioners and Specialists in the PrimaryHealth Care Market

In this paper, we study the optimal payment system for the primary health care market when general practitioners are not only in competition between themselves but also with specialists. We define the copayment to impose in order to ensure a good allocation of patients among the two types of physicians. Further, we set the physician reimbursement system that guarantees an appropriate referral of patients to specialists. We prove that the GP's remuneration system is more prospective the larger the competition with specialists. Next, we show that the assumption of risk-averse patients precludes the optimal payment system from being a first-best solution. To conclude, we contrast the results of the analysis with systems of gatekeepers where all patients are required to go to a general practitioner before having access to specialized medicine.