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Paying Physicians: Straight Salary or Fee-for-Service
Carnegie Mellon University's George Loewenstein, Ph.D., and the University of California, Los Angeles' Ian Larkin, Ph.D., write, in the Journal of the American Medical Association, that fee-for-service arrangements create incentives for physicians to order more, and different, services than are best for patients. The authors maintain that the simplest and most effective way to deal with conflicts caused by fee-for-service arrangements is to pay physicians on a straight salary basis. They cite several health systems well-known for high-quality of care, such as the Mayo Clinic, the Cleveland Clinic, and the Kaiser group in California, which pay physicians salaries without incentives for volume of services performed.