How Should Doctors Be Paid? Lessons From Theory and Practice

Abstract

For long now, doctors in Uganda have been complaining that their terms of service, particularly remuneration, are not commensurate with the years that they spend training and the amount of work that they do. This issue has persistently been raised at several fora over the years but with no definite resolution. But how should doctors be paid? This paper attempts to answer this question. In the developed world, policy makers attempt to answer the question of cost containment. In Uganda, due to limited financial resources, the overriding question is where will the extra resources to adequately pay doctors be found? Two further questions should be considered: How can consumers of medical care be protected against the financial risk of health expenditure? In other words, how can patients who seek health care be protected from becoming impoverished through

1. seeking health care? 2. Secondly, what is the best way of providing efficient levels and types of health care services without affecting the utilities of both the providers and consumers of health care (i.e. being fair to both consumers and providers)?

The main problem here is that payers (private or third party) for health services can only imperfectly observe the true costs borne by health care providers. In an attempt to solve this problem, two alternate strategies for controlling healthcare costs can be suggested.