Encouraging preventive services in primary care through payment schemes

Abstract

Strengthening the use of preventive services in primary care has become the key to solving the problem of a global increase in healthcare expenditures caused by aging populations and chronic diseases. In practice, whether devoting effort to preventive services can be a strategic decision when the limited working time keeps a general practitioner (GP) busy with diagnosis and treatment. Based on the above motivations and challenges, we are the first to focus on the conflict between treatment services and preventive services of a GP with limited service capacity in the healthcare field. This paper considers a public health system consisting of a funder, a GP, a specialist, and a pool of delay-sensitive residents. Four payment schemes are investigated in terms of encouraging the GP to deliver preventive services: (i) fee for service (FFS), (ii) capitation, (iii) GP fundholding, and (iv) penalty scheme. The result shows that the GP fundholding scheme and the penalty scheme are more effective in encouraging preventive service provision in primary care, whereas the other two schemes may result in underinvestment in preventive services. Further, we compare the performance of the GP fundholding scheme and penalty scheme by applying the optimal reimbursement, which refers to the amount that maximizes social welfare. Compared with the GP fundholding scheme, the penalty scheme can incentivize preventive services with lower expenditures for the funder. There are two additional interesting findings: (1) A larger reimbursement discourages the GP from delivering preventive services. (2) An increased marginal treatment cost always incentivizes the GP to allocate more working time to preventive services, thereby reducing the referral rate and saving costs. Counterintuitively, increasing the marginal cost of preventive services may also encourage the GP to deliver preventive services. Our analysis sheds light on how to encourage preventive service provision in primary care through payment schemes.