This article presents a theoretical and empirical discussion of how costs of outpatient medical practice vary with the size of the group providing services. It focuses upon the incentives of the individual physican to keep the costs of the practice down and his work effort high. Since cost and...

There are two types of selection models in the health economics literature. One focuses on choice between a fixed set of contracts. Consumers with greater demand for medical care services prefer contracts with more generous reimbursement, resulting in a suboptimal proportion of consumers in such...