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Negotiation Advantages of Professional Associations in Health Care

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Abstract

In several instances, third-party payers negotiate prices of health care services with providers. We show that a third-party payer may prefer to deal with a professional association than with the sub-set constituted by the more efficient providers, and then apply the same price to all providers. The reason for it is the increase in the bargaining position of providers. The more efficient providers are also the ones with higher profits in the event of negotiation failure. This allows them to ext act a higher surplus from the third-party payer.

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Paper provided by Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC) in its series UFAE and IAE Working Papers with number 466.00.

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Length: 13
Date of creation: 05 Nov 2000
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Handle: RePEc:aub:autbar:466.00

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Keywords: Professional Associations; Health Care; Negotiation;

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  1. Binmore, Ken & Osborne, Martin J. & Rubinstein, Ariel, 1992. "Noncooperative models of bargaining," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 1, chapter 7, pages 179-225 Elsevier.
  2. A. Michael Spence, 1977. "Entry, Capacity, Investment and Oligopolistic Pricing," Bell Journal of Economics, The RAND Corporation, vol. 8(2), pages 534-544, Autumn.
  3. A. Michael Spence, 1979. "Investment Strategy and Growth in a New Market," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 1-19, Spring.
  4. Dixit, Avinash, 1979. "The Role of Investment in Entry-Deterrence," The Warwick Economics Research Paper Series (TWERPS) 140, University of Warwick, Department of Economics.
  5. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
  6. Fingleton, John & Raith, Michael, 2001. "Open Covenants, Privately Arrived At," CEPR Discussion Papers 2709, C.E.P.R. Discussion Papers.
  7. Xavier Martinez-Giralt & Pedro Pita Barros, 2000. "Selecting Negotiation Processes with Health Care," UFAE and IAE Working Papers 467.00, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  8. Martin J. Osborne & Ariel Rubinstein, 2005. "Bargaining and Markets," Levine's Bibliography 666156000000000515, UCLA Department of Economics.
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Cited by:
  1. Pedro Pita Barros & Xavier Martinez-Giralt, 2005. "Bargaining and idle public sector capacity in health care," Working Papers 170, Barcelona Graduate School of Economics.
  2. Pedro Pita Barros & Xavier Martinez-Giralt, 2003. "Selecting Negotiation Processes with Health Care Providers," Working Papers 30, Barcelona Graduate School of Economics.
  3. Kurt R. Brekke & Lars S�rgard, 2007. "Public versus private health care in a national health service," Health Economics, John Wiley & Sons, Ltd., vol. 16(6), pages 579-601.
  4. Luigi Siciliani & Anderson Stanciole, 2013. "Bargaining and the provision of health services," The European Journal of Health Economics, Springer, vol. 14(3), pages 391-406, June.
  5. Hiroshi Aiura & Yasuo Sanjo, 2010. "Privatization of local public hospitals: effect on budget, medical service quality, and social welfare," International Journal of Health Care Finance and Economics, Springer, vol. 10(3), pages 275-299, September.
  6. Barros, Pedro Pita & Martinez-Giralt, Xavier, 2008. "Selecting health care providers: "Any willing provider" vs. negotiation," European Journal of Political Economy, Elsevier, vol. 24(2), pages 402-414, June.

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