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Choice of contracts for quality in health care: Evidence from the British NHS

Author

Listed:
  • Eleonora Fichera

    (Manchester Centre for Health Economics, University of Manchester, UK)

  • Hugh Gravelle

    (Centre for Health Economics, University of York, UK)

  • Mario Pezzino

    (Economics, School of Social Sciences, University of Manchester, UK)

  • Matt Sutton

    (Institute of Population Health, Manchester Centre for Health Economics, University of Manchester, UK)

Abstract

We examine how public sector third-party purchasers and hospitals negotiate quality targets when a fixed proportion of hospital revenue is required to be linked to quality. We develop a bargaining model linking the number of quality targets to purchaser and hospital characteristics. Using data extracted from 153 contracts for acute hospital services in England in 2010/11, we find that the number of quality targets is determined by the purchaser's population health and its budget, the hospital type, whether the purchaser delegated negotiation to an agency, and the quality targets imposed by the supervising regional health authority.

Suggested Citation

  • Eleonora Fichera & Hugh Gravelle & Mario Pezzino & Matt Sutton, 2013. "Choice of contracts for quality in health care: Evidence from the British NHS," Working Papers 085cherp, Centre for Health Economics, University of York.
  • Handle: RePEc:chy:respap:85cherp
    as

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    File URL: http://www.york.ac.uk/media/che/documents/papers/researchpapers/CHERP85_contract_choice_quality_healthcare_NHS.pdf
    File Function: First version, 2013
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    References listed on IDEAS

    as
    1. Luigi Siciliani & Anderson Stanciole, 2013. "Bargaining and the provision of health services," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(3), pages 391-406, June.
    2. Chalkley, Martin & McVicar, Duncan, 2008. "Choice of contracts in the British National Health Service: An empirical study," Journal of Health Economics, Elsevier, vol. 27(5), pages 1155-1167, September.
    3. Shaban, Radwan Ali, 1987. "Testing between Competing Models of Sharecropping," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 893-920, October.
    4. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, January.
    5. Robert Elliott & Ada Ma & Matt Sutton & Diane Skatun & Nigel Rice & Stephen Morris & Alex McConnachie, 2010. "The role of the staff MFF in distributing NHS funding: taking account of differences in local labour market conditions," Health Economics, John Wiley & Sons, Ltd., vol. 19(5), pages 532-548.
    6. Barros, Pedro Pita & Martinez-Giralt, Xavier, 2008. "Selecting health care providers: "Any willing provider" vs. negotiation," European Journal of Political Economy, Elsevier, vol. 24(2), pages 402-414, June.
    7. Petsoulas, Christina & Allen, Pauline & Hughes, David & Vincent-Jones, Peter & Roberts, Jennifer, 2011. "The use of standard contracts in the English National Health Service: A case study analysis," Social Science & Medicine, Elsevier, vol. 73(2), pages 185-192, July.
    8. Williamson, Oliver E, 1983. "Credible Commitments: Using Hostages to Support Exchange," American Economic Review, American Economic Association, vol. 73(4), pages 519-540, September.
    9. Martin Emmert & Frank Eijkenaar & Heike Kemter & Adelheid Esslinger & Oliver Schöffski, 2012. "Economic evaluation of pay-for-performance in health care: a systematic review," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 13(6), pages 755-767, December.
    10. Fenn, Paul & Rickman, Neil & McGuire, Alistair, 1994. "Contracts and supply assurance in the UK health care market," Journal of Health Economics, Elsevier, vol. 13(2), pages 125-144, July.
    11. Csaba, Ivan & Fenn, Paul, 1997. "Contractual choice in the managed health care market An empirical analysis," Journal of Health Economics, Elsevier, vol. 16(5), pages 579-588, October.
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    Cited by:

    1. Gravelle, Hugh & Santos, Rita & Siciliani, Luigi, 2014. "Does a hospital's quality depend on the quality of other hospitals? A spatial econometrics approach," Regional Science and Urban Economics, Elsevier, vol. 49(C), pages 203-216.

    More about this item

    Keywords

    Contracts; quality; financial incentives; pay for performance; hospitals; Nash bargaining;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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