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The optimality of hospital financing system: the role of physician–manager interactions

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Author Info

  • David Crainich

    ()

  • Hervé Leleu

    ()

  • Ana Mauleon

    ()

Abstract

In a paper published by Ma (1994) it was argued that the prospective payment system in the hospital industry was superior to the cost based reimbursement system to achieve both cost reduction and quality improvement ob jectives. In the analysis, it was assumed that quality and costs decisions were made by a single agent. Our paper compares these two financing systems assuming that the main decisions taken within the hospital are shared between physicians (quality of treatment) and hospital managers (cost reduction). If Ma’s conclusions hold in the US context (where the hospital managers bear the whole cost of treatment), we show that the ability of a prospective payment system to achieve both ob jectives is very depending of the type of interaction between the agents when physicians bear a part of the treatment cost as it is the case in many European countries.

(This abstract was borrowed from another version of this item.)

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File URL: http://hdl.handle.net/10.1007/s10754-008-9039-x
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Bibliographic Info

Article provided by Springer in its journal International Journal of Health Care Finance and Economics.

Volume (Year): 8 (2008)
Issue (Month): 4 (December)
Pages: 245-256

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Handle: RePEc:kap:ijhcfe:v:8:y:2008:i:4:p:245-256

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Web page: http://www.springerlink.com/link.asp?id=106603

Related research

Keywords: Hospital’s financing system; Strategic interaction; Prospective payment system; H51; I18; D21;

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References

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  1. Ching-to Albert Ma, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Papers 0047, Boston University - Industry Studies Programme.
  2. Custer, William S. & Moser, James W. & Musacchio, Robert A. & Willke, Richard J., 1990. "The production of health care services and changing hospital reimbursement : The role of hospital-medical staff relationships," Journal of Health Economics, Elsevier, vol. 9(2), pages 167-192, September.
  3. Chalkley, M. & Malcomson, J.M., 1995. "Contracting for health services with unmonitored quality," Discussion Paper Series In Economics And Econometrics 9510, Economics Division, School of Social Sciences, University of Southampton.
  4. BOADWAY, Robin & MARCHAND, Maurice & SATO, Motohiro, . "An optimal contract approach to hospital financing," CORE Discussion Papers RP -1692, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  5. Pope, Gregory C., 1990. "Using hospital-specific costs to improve the fairness of prospective reimbursement," Journal of Health Economics, Elsevier, vol. 9(3), pages 237-251, November.
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Cited by:
  1. CRAINICH, David & LELEU, Hervé & MAULEON, Ana, 2006. "Hospital’s activity-based financing system and manager-physician interaction," CORE Discussion Papers 2006029, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Makoto Kakinaka & Ryuta Kato, 2013. "Regulated medical fee schedule of the Japanese health care system," International Journal of Health Care Finance and Economics, Springer, vol. 13(3), pages 301-317, December.
  3. Kathleen A. Carroll & Jane E. Ruseski, 2011. "Modeling Internal Decision Making Process: An Explanation Of Conflicting Empirical Results On Behavior Of Non‐Profit And For‐Profit Hospitals," Contemporary Economic Policy, Western Economic Association International, vol. 29(4), pages 510-523, October.

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