Chapter 3.1 draws out insights into the way primary care is paid. Primary care delivers first-contact access to health services and seeks to coordinate care. It is paid for in different ways in different settings: through salary, capitation (a fixed payment per enlisted patient), fee for service, pay for performance or blended payments that combine two or more of these methods. Key learning includes that

• The way health systems pay for primary care can incentivize treatment that supports wider health systems’ goals, most particularly by

• – Reducing avoidable referrals to secondary care, improving efficiency and reducing waste and

• – Encouraging adherence to evidence-based clinical guidelines, enhancing quality.

• Pay for performance is often used to improve quality but the evidence on how effective it is, is mixed. If performance measures are not carefully designed to be context-specific and adjust for risk appropriately, they can create unintended barriers to and inequalities in access.

• The design of primary care payment models needs to be ‘holistic’, to consider the goals of the health system and to underpin quality, access and efficiency.

Chapter 8 explores how incentives influence the behavior of providers. The first part of the chapter is an application of personnel economics, discussing how different pay schemes create incentives for different types of effort. The chapter goes on to discuss the latent variable problem when looking at pay schemes and behavior and covers literature that helps to unpack the causal story. The second half of the chapter discusses demand inducement and its variants (fee splitting and self-referral) from both a theoretical and empirical perspective. The end of chapter supplement gives a brief introduction to behavioral economics and how cognitive biases can also be used to influence provider behavior.