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Hospital’s activity-based financing system and manager-physician interaction

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  • CRAINICH, David
  • LELEU, Hervé
  • MAULEON, Ana

Abstract

Hospital financing systems determine ma jor decisions made by physicians and managers within hospitals. This paper examines the impact of the transition toward an activity-based reimburse- ment system that has emerged in most OCDE countries. We consider two initial situations, one for a private for-profit sector where both hospitals and physicians are paid on a fee-for-service basis and the other for a public sector under prospective budget and salaried physicians. For the private sector, our model focuses on the type of interaction (simultaneous, sequential or joint decision-making games) that should emerge between agents after the introduction of the activity-based financing system. In the public sector, the elasticity of the demand to the level of inputs seems to play a more crucial role in the transition.

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Bibliographic Info

Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers with number 2006029.

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Date of creation: 00 Mar 2006
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Handle: RePEc:cor:louvco:2006029

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Keywords: hospital's financing system; strategic interaction; activity-based pay- ment system.;

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  1. Amir Rabah, 1995. "Endogenous Timing in Two-Player Games: A Counterexample," Games and Economic Behavior, Elsevier, vol. 9(2), pages 234-237, May.
  2. Boadway, Robin & Marchand, Maurice & Sato, Motohiro, 2004. "An optimal contract approach to hospital financing," Journal of Health Economics, Elsevier, vol. 23(1), pages 85-110, January.
  3. Dor, Avi & Watson, Harry, 1995. "The hospital-physician interaction in U.S. hospitals: Evolving payment schemes and their incentives," European Economic Review, Elsevier, vol. 39(3-4), pages 795-802, April.
  4. Ma, Ching-to Albert, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 93-112, Spring.
  5. McGuire, A., 1985. "The theory of the hospital: A review of the models," Social Science & Medicine, Elsevier, vol. 20(11), pages 1177-1184, January.
  6. Xavier Vives, 2001. "Oligopoly Pricing: Old Ideas and New Tools," MIT Press Books, The MIT Press, edition 1, volume 1, number 026272040x, December.
  7. van de Ven, Wynand P. M. M., 1995. "Regulated competition in health care: With or without a global budget?," European Economic Review, Elsevier, vol. 39(3-4), pages 786-794, April.
  8. Hamilton, J.H. & Slutsky, S.M., 1988. "Endogenous Timing In Duopoly Games: Stackelberg Or Cournot Equilibria," Papers 88-4, Florida - College of Business Administration.
  9. 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.
  10. 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.
  11. 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.
  12. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
  13. CRAINICH, David & LELEU, Hervé & MAULEON, Ana, 2006. "The optimality of hospital financing system: the role of physician-manager interactions," CORE Discussion Papers 2006005, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  14. Ellis, Randall P., 1998. "Creaming, skimping and dumping: provider competition on the intensive and extensive margins1," Journal of Health Economics, Elsevier, vol. 17(5), pages 537-555, October.
  15. Ana, MAULEON & Laurent, COUDEVILLE & Benoit, DERVAUX, 2004. "Prospective payment system : consequences for hospital-physician interactions in the private sector," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  16. Mougeot, Michel & Naegelen, Florence, 2005. "Hospital price regulation and expenditure cap policy," Journal of Health Economics, Elsevier, vol. 24(1), pages 55-72, January.
  17. Crilly, Tessa & Le Grand, Julian, 2004. "The motivation and behaviour of hospital Trusts," Social Science & Medicine, Elsevier, vol. 58(10), pages 1809-1823, May.
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