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Paying for Performance in Hospitals

Author

Listed:
  • Burkhard Hehenkamp

    (Technische Universität Dortmund, Wirtschafts- und Sozialwissenschaftliche Fakultät, Lehrstuhl VWL (Mikroökonomie), 44221 Dortmund, Germany)

  • Oddvar Kaarbøe

    (Department of Economics and Health Economics Bergen (HEB), University of Bergen, Hermann Fossg. 6, N-5007 Bergen, Norway)

Abstract

A frequent form of pay-for-performance programs increase reimbursement for all services by a certain percentage of the baseline price. We examine how such a ?bonus-for-quality? reimbursement scheme a¤ects the wage contract given to physicians by the hospital management. To this end, we determine the bonus inducing hospitals to incentivize their physicians to meet the quality standard. Additionally, we show that the health care payer has to complement the bonus with a (sometimes negative) block grant. We conclude the paper relating the role of the block grant to recent experiences in health care market.

Suggested Citation

  • Burkhard Hehenkamp & Oddvar Kaarbøe, 2011. "Paying for Performance in Hospitals," Economic Analysis and Policy, Elsevier, vol. 41(1), pages 49-70, March.
    • Handle: RePEc:eee:ecanpo:v:41:y:2011:i:1:p:49-70
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    Cited by:

    1. Aida Isabel Tavares, 2014. "Doctor-Nurse Teams, Incentives and Behavior," Notas Económicas, Faculty of Economics, University of Coimbra, issue 39, pages 9-35, June.

    More about this item

    Keywords

    Paying-for-Performance; Quality; Hospital Financing;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods

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