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Creaming and Dumping: Who on Whom?

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    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.

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    File URL: http://static.sdu.dk/mediafiles//E/4/6/%7BE46E9F14-19A4-4FE5-8EAB-FACA1D5A46EC%7D2014_4.pdf
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    Paper provided by COHERE - Centre of Health Economics Research, University of Southern Denmark in its series COHERE Working Paper with number 2014:4.

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    Length: 21 pages
    Date of creation: 01 Mar 2014
    Date of revision:
    Handle: RePEc:hhs:sduhec:2014_004
    Contact details of provider: Postal: COHERE - Center for Sundhedsøkonomisk Forskning, Institut for Virksomhedsledelse og Økonomi, Syddansk Universitet, Campusvej 55, DK-5230 Odense M, Denmark
    Phone: (+45) 6550 3081
    Fax: (+45) 6550 3880
    Web page: http://www.sdu.dk/Om_SDU/Institutter_centre/cCohere
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    1. 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.
    2. 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.
    3. Pedro Pita Barros & Pau Olivella, . "Waiting Lists And Patient Selection," UFAE and IAE Working Papers 444.99, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    4. 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.
    5. Shishko, Robert & Rostker, Bernard, 1976. "The Economics of Multiple Job Holding," American Economic Review, American Economic Association, vol. 66(3), pages 298-308, June.
    6. Le Grand, Julian, 1991. "Quasi-markets and Social Policy," Economic Journal, Royal Economic Society, vol. 101(408), pages 1256-67, September.
    7. 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.
    8. 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.
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