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A Competitive Process for Procuring Health Services: A Review of Principles with an Application to Cataract Services

Author

Listed:
  • David Dranove

    (Kellogg Graduate School of Management, Northwestern University)

  • Cory Capps

    (Bates White)

  • Leemore Dafny

    (Kellogg Graduate School of Management, Northwestern University)

Abstract

Government agencies employ a variety of mechanisms for securing goods and services from the private sector. These include posting prices, reimbursing for costs, and soliciting competitive bids. Procurement of healthcare services offers several unique challenges. The supplier can influence the quantity of services provided. It is often difficult to even specify in advance exactly what services are to be purchased. Lastly, quality is difficult to measure. Healthcare purchasers have deployed a variety of payment mechanisms to cope with these challenges. We apply the theory of procurement to the case of cataract surgery. We recommend implementing a system that combines a gatekeeper with competitive bidding among operating physicians who must perform all necessary services, including treatment for complications, within a global fee. We conclude by discussing the strengths and limitations of this proposal.

Suggested Citation

  • David Dranove & Cory Capps & Leemore Dafny, 2009. "A Competitive Process for Procuring Health Services: A Review of Principles with an Application to Cataract Services," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 2(5), December.
    • Handle: RePEc:clh:resear:v:2:y:2009:i:5
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    References listed on IDEAS

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    Cited by:

    1. Janice MacKinnon & Jack M. Mintz, 2017. "Putting the Alberta Budget on a New Trajectory," SPP Research Papers, The School of Public Policy, University of Calgary, vol. 10(26), October.

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