Capitation contracts: access and quality.

The implications of competition amongst providers in both private and public systems for the quality of service and the number of care providers are analysed. Strong conditions must be imposed on preferences and cost conditions for quality to be efficiently supplied. In a median voter model of a public system the capitation fee and quality are lower than under competitive market equilibria and the number of practices inefficiently small. Entry control by a union which maximises gross provider income reduces the number of practices until the market is only just covered.