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Specialist payment schemes and patient selection in private and public hospitals, CHERE Discussion Paper No 54

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  • Donald J Wright

    ()
    (Department of Economics, University of Sydney)

Abstract

It has been observed that specialist physicians who work in private hospitals are usually paid by fee-for-service while specialist physicians who work in public hospitals are usually paid by salary. This paper provides an explanation for this observation. Essentially, fee-for-service aligns the interests of income preferring specialist with profit maximizing private hospitals and results in private hospitals treating a high proportion of short stay patients. On the other hand, salary aligns the interests of fairness preferring specialists with welfare maximizing public hospital and results in public hospitals treating all patients irrespective of their length of stay.

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File URL: http://www.chere.uts.edu.au/pdf/dp54.pdf
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Bibliographic Info

Paper provided by CHERE, University of Technology, Sydney in its series Discussion Papers with number 54.

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Date of creation: Dec 2004
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Handle: RePEc:her:chedps:54

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Keywords: Physician payments;

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  1. Chalkley, M. & Malcomson, J.M., 1995. "Contracting for health services when patient demand does not reflect quality," Discussion Paper Series In Economics And Econometrics 9514, Economics Division, School of Social Sciences, University of Southampton.
  2. Ching-to Albert Ma & Thomas G. McGuire, 1995. "Optimal Health Insurance and Provider Payment," Papers 0059, Boston University - Industry Studies Programme.
  3. Elena Polverejan & Joseph C. Gardiner & Cathy J. Bradley & Margaret Holmes-Rovner & David Rovner, 2003. "Estimating mean hospital cost as a function of length of stay and patient characteristics," Health Economics, John Wiley & Sons, Ltd., vol. 12(11), pages 935-947.
  4. Kathleen Carey, 2000. "Hospital Cost Containment and Length of Stay: An Econometric Analysis," Southern Economic Journal, Southern Economic Association, vol. 67(2), pages 363-380, July.
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