Referral systems and health-care-seeking behaviour of patients: an economic analysis

The paper studies medical referral systems of developing countries in relation to patients' health-care-seeking behaviour. It is shown that the vertical referral structures are consistent with patients' cost-minimizing behaviour in their search of medical treatments. This consistency is a consequence of a common desire among patients and health planners, to minimize costs of treating illnesses so as to get the most from their limited resources. The conditions under which the medical referral system reflects treatment seeking behaviour of patients are specified. Since these conditions do not hold exactly in the real world, the referral system has some major weaknesses as a model of how National Health Service delivery systems actually function. Reforms that can be undertaken to rectify these weaknesses are suggested.