One physician is paid $100 per visit. Another is paid $2,500 per week plus $100

Question

One physician is paid $100 per visit. Another is paid $2,500 per week plus $100 per session in excess of 20 sessions per week. A third is paid $2,000 per week plus $100 per session in excess of 20 sessions per week. The third physician is also paid a weekly bonus of $500 for being in the top quartile in management of common chronic diseases, appropriate antibiotic use, preventive counseling, screening tests, and appropriate prescribing in elderly patients. How do the physicians’ incentives compare?

Explanation / Answer

The physical incentives compare because all have fixed and variable costs but there is no comparison when it comes to payment. The cost which is fixed like ths physician visit irrespective of any session then it is fixed cost. When the cost varies with the number of sessions then it is fixed cost

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