Transaction costs are an obstacle to the efficient operation of selective contracting. Health care delivery systems (§140 a-d SGB V) and selective contracting between networks of service providers and purchasers are advocated as an effective method to improve the performance of the German health care system. The problems of measurability, motivation associated with specific production of health care services forms a stronger regulatory environment. Contracting mechanisms should be analysed before purchasers can rely on obtaining these services from the selective contracting sector. This paper focuses on the theories from new institutional economics to analyze the policies of competitive contracting in the presence of asymmetric information, uncertainty and the inability to write complete contingent contracts. It is crucial, that both parties agree on the avoidance of endogenous risks and the procedures with unforeseeable contingencies (exogenous risks). Strategic behavior because of moral hazard and hold up situations is referred to endogenous risk. Uncertainty based on contingency, error and change of utilization are identified as exogenous risks. In order to control these risks structured renegotiations and risk-sharing and shared-saving arrangements should be scheduled.
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Article provided by Justus-Liebig University Giessen, Department of Statistics and Economics in its journal Journal of Economics and Statistics.
Volume (Year): 227 (2007) Issue (Month): 5-6 (December) Pages: 765-786 Download reference. The following formats are available: HTML
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Find related papers by JEL classification: I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation