Partnerships, profit sharing, and quality competition in the medical profession
This paper contains a theoretical model of medical partnerships with individual quantity and quality choice. The firm selects price, the number of partners and profit sharing. The firm encourages inter-firm quality competition and discourages intra-firm quality competition through differential profit sharing. An empirical model using data from a nationwide survey of medical practices supports the theoretical results. Further, empirical results support the view that time per visit can be used as a proxy index for quality in the primary care physician market.
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