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Regulating Providers' Reimbursement in a Mixed Market for Health Care

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  • Rickman, Neil
  • McGuire, Alistair

Abstract

Hospitals can be reimbursed for their costs in many ways. Several authors have investigated the effects of these reimbursement rules on physician incentives and, therefore, on the quantity of services provided to patients. A form of (linear) cost-sharing tends to emerge as the socially efficient reimbursement policy. The authors present a model of hospital reimbursement, based on Ellis and McGuire (1986). The new feature is that physicians can supply private health care services to a patient, as well as public sector ones; a common institutional arrangement in many health care systems. They investigate the optimal public sector reimbursement rule given that private market incentives must now be taken into account. Public sector cost-sharing remains socially efficient, but it is generally nonlinear: the precise details depend on whether public and private services are substitutes or complements and on the degree of social efficiency achieved in the private sector. Other reimbursement schemes exhibit optimality properties not present in Ellis and McGuire's work. Copyright 1999 by Scottish Economic Society.

Suggested Citation

  • Rickman, Neil & McGuire, Alistair, 1999. "Regulating Providers' Reimbursement in a Mixed Market for Health Care," Scottish Journal of Political Economy, Scottish Economic Society, vol. 46(1), pages 53-71, February.
  • Handle: RePEc:bla:scotjp:v:46:y:1999:i:1:p:53-71
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    Cited by:

    1. Paula González, 2005. "On a policy of transferring public patients to private practice," Health Economics, John Wiley & Sons, Ltd., vol. 14(5), pages 513-527.
    2. Socha-Dietrich, Karolina & Zweifel, Peter, 2014. "Creaming and Dumping: Who on Whom?," COHERE Working Paper 2014:4, University of Southern Denmark, COHERE - Centre of Health Economics Research.
    3. Ricardo Gonçalves & Vasco Rodrigues & Hélder Vasconcelos, 2015. "Reference pricing in the presence of pseudo-generics," International Journal of Health Economics and Management, Springer, vol. 15(3), pages 281-305, September.
    4. González, Paula & Macho-Stadler, Inés, 2013. "A theoretical approach to dual practice regulations in the health sector," Journal of Health Economics, Elsevier, vol. 32(1), pages 66-87.
    5. McPake, Barbara & Russo, Giuliano & Tseng, Fu-Min, 2014. "How do dual practitioners divide their time? The cases of three African capital cities," Social Science & Medicine, Elsevier, vol. 122(C), pages 113-121.
    6. Gary Biglaiser & Ching-to Albert Ma, 2007. "Moonlighting: public service and private practice," RAND Journal of Economics, RAND Corporation, vol. 38(4), pages 1113-1133, December.
    7. Maija Halonen-Akatwijuka & Carol Propper, 2012. "Competition, Equity and Quality in Health Care," The Centre for Market and Public Organisation 12/296, Department of Economics, University of Bristol, UK.
    8. Kurt R. Brekke & Lars Sørgard, 2007. "Public versus private health care in a national health service," Health Economics, John Wiley & Sons, Ltd., vol. 16(6), pages 579-601.
    9. Garcia-Prado, Ariadna & Gonzalez, Paula, 2007. "Policy and regulatory responses to dual practice in the health sector," Health Policy, Elsevier, vol. 84(2-3), pages 142-152, December.
    10. Eggleston, Karen & Bir, Anupa, 2006. "Physician dual practice," Health Policy, Elsevier, vol. 78(2-3), pages 157-166, October.
    11. Johannessen, Karl Arne & Kittelsen, Sverre A.C. & Hagen, Terje P., 2017. "Assessing physician productivity following Norwegian hospital reform: A panel and data envelopment analysis," Social Science & Medicine, Elsevier, vol. 175(C), pages 117-126.
    12. Ikuo Ishibashi & Noriaki Matsushima, 2012. "Should Public Sectors Be Complements of Private Sectors?," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(4), pages 712-730, December.
    13. Socha, Karolina, 2010. "Physician dual practice and the public health care provision. Review of the literature," COHERE Working Paper 2010:4, University of Southern Denmark, COHERE - Centre of Health Economics Research.
    14. Paula González, 2004. "Should physicians' dual practice be limited? An incentive approach," Health Economics, John Wiley & Sons, Ltd., vol. 13(6), pages 505-524.
    15. Socha, Karolina Z. & Bech, Mickael, 2011. "Physician dual practice: A review of literature," Health Policy, Elsevier, vol. 102(1), pages 1-7, September.
    16. Schuster, Stephan, 2012. "Applications in Agent-Based Computational Economics," MPRA Paper 47201, University Library of Munich, Germany.

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