IDEAS home Printed from
   My bibliography  Save this paper

Prospective payment system : consequences for hospital-physician interactions in the private sector


  • Ana, MAULEON

    (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES) and CRESGE-LABORES, Université Catholique de Lille-France)

  • Laurent, COUDEVILLE

    (CRESGE-LABORES, Université Catholique de Lille-France)

  • Benoit, DERVAUX

    (CRESGE-LABORES, Université Catholique de Lille-France)


In 2004, French health authorities plan to introduce a prospective payment system for hospitals delivering acute care based on the DRG classification system. In this paper, we analyze the consequences of this switch from a retrospective to a prospective payment system on the ability of physicians and hospital managers to coordinate their activity in the production of hospital stays. Our analysis follows those of Dor and Watson (1995) and Custer et al. (1990) but is adapted to the context of the French hospital private sector. Different types of interactions are considered : non-cooperative, dominant-reactive, and cooperative. The main result of this analysis is that, in a context in which average per-patient fees are maintained, the change of payment system is potentially gainful for both partners. Although their fees are not concerned by the reform, physicians are even in a better position than hospitals tot ake advantage of the change of payment system. A minimum level of coordination is nevertheless required, i.e. either cooperative or dominant-reactive interactions. Furthermore, two elements limits the importance of these potential gains : these are only one-shot gains and hence depend on the ability to reduce the length of hospital stays. Finally, some extensions regarding competition between public and private hospitals and negotiation issues are discussed.

Suggested Citation

  • Ana, MAULEON & Laurent, COUDEVILLE & Benoit, DERVAUX, 2004. "Prospective payment system : consequences for hospital-physician interactions in the private sector," Discussion Papers (IRES - Institut de Recherches Economiques et Sociales) 2004011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  • Handle: RePEc:ctl:louvir:2004011

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Pauly, Mark V & Redisch, Michael, 1973. "The Not-For-Profit Hospital as a Physicians' Cooperative," American Economic Review, American Economic Association, vol. 63(1), pages 87-99, March.
    2. Foster, Richard W., 1985. "Cost-shifting under cost reimbursement and prospective payment," Journal of Health Economics, Elsevier, vol. 4(3), pages 261-271, September.
    3. repec:adr:anecst:y:2000:i:58:p:08 is not listed on IDEAS
    4. Chalkley, Martin & Malcomson, James M, 1998. "Contracting for Health Services with Unmonitored Quality," Economic Journal, Royal Economic Society, vol. 108(449), pages 1093-1110, July.
    5. 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.
    6. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
    7. 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.
    8. Michel Mougeot, 2000. "La tarification hospitalière : de l'enveloppe globale à la concurrence par comparaison," Annals of Economics and Statistics, GENES, issue 58, pages 195-213.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. David Crainich & Hervé Leleu & Ana Mauleon, 2011. "Hospital’s activity-based financing system and manager: physician interaction," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(5), pages 417-427, October.

    More about this item


    prospective payment system; retrospective payment system; physician behabivour; for-profit hospitals;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • D2 - Microeconomics - - Production and Organizations

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ctl:louvir:2004011. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Virginie LEBLANC). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.