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Creaming and Dumping: Who on Whom?

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Abstract

In several countries, public healthcare providers purchase services from private providers to shorten waiting times. Some private providers in turn combine public service with practice in their own facilities. According to the existing literature, they are viewed as cream-skimming profitable (low-severity) public patients to the benefit of private practice, causing cost of treatment in the public sector to increase. This is particularly problematic when public provider payment is prospective. However, two facts seem to be neglected. First, cream skimming involves effort and thus does not occur in all circumstances. Second, public providers might have an incentive to select patients too, resulting in dumping of the least profitable (high-severity) patients on the private sector. This paper derives the conditions under which both creaming and dumping are predicted to occur.

Suggested Citation

  • 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.
  • Handle: RePEc:hhs:sduhec:2014_004
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    File URL: https://www.sdu.dk/-/media/files/om_sdu/centre/cohere/working+papers/2014/2014_4.pdf
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    References listed on IDEAS

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    1. Pedro Pita Barros & Pau Olivella, 2005. "Waiting Lists and Patient Selection," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 14(3), pages 623-646, September.
    2. 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.
    3. Newhouse, Joseph P. & Byrne, Daniel J., 1988. "Did Medicare's Prospective Payment System cause length of stay to fall?," Journal of Health Economics, Elsevier, vol. 7(4), pages 413-416, December.
    4. 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.
    5. 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.
    6. Ma, Ching-to Albert & McGuire, Thomas G, 1997. "Optimal Health Insurance and Provider Payment," American Economic Review, American Economic Association, vol. 87(4), pages 685-704, September.
    7. Shishko, Robert & Rostker, Bernard, 1976. "The Economics of Multiple Job Holding," American Economic Review, American Economic Association, vol. 66(3), pages 298-308, June.
    8. Le Grand, Julian, 1991. "Quasi-markets and Social Policy," Economic Journal, Royal Economic Society, vol. 101(408), pages 1256-1267, September.
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    More about this item

    Keywords

    Creaming; Dumping; Waiting lists; Public Service; Dual Practice;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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