The optimality of hospital financing system: the role of physician–manager interactions
In a paper published by Ma (1994) it was argued that the prospective payment system in the hospital industry was superior to the cost based reimbursement system to achieve both cost reduction and quality improvement ob jectives. In the analysis, it was assumed that quality and costs decisions were made by a single agent. Our paper compares these two ﬁnancing systems assuming that the main decisions taken within the hospital are shared between physicians (quality of treatment) and hospital managers (cost reduction). If Ma’s conclusions hold in the US context (where the hospital managers bear the whole cost of treatment), we show that the ability of a prospective payment system to achieve both ob jectives is very depending of the type of interaction between the agents when physicians bear a part of the treatment cost as it is the case in many European countries.
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Volume (Year): 8 (2008)
Issue (Month): 4 (December)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- 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.
- Ching-to Albert Ma, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Papers 0047, Boston University - Industry Studies Programme.
- BOADWAY, Robin & MARCHAND, Maurice & SATO, Motohiro, .
"An optimal contract approach to hospital financing,"
CORE Discussion Papers RP
1692, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- 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.
- BOADWAY, Robin & MARCHAND, Maurice & SATO, Motohiro, 2003. "An optimal contract approach to hospital financing," CORE Discussion Papers 2003021, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Chalkley, Martin & Malcomson, James M, 1998.
"Contracting for Health Services with Unmonitored Quality,"
Royal Economic Society, vol. 108(449), pages 1093-1110, July.
- 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.
- 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.
- 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.
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