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Ownership, Incentives and Hospitals

  • Xavier Fageda


    (Faculty of Economics, University of Barcelona)

  • Eva Fiz


    (Faculty of Economics, University of Barcelona)

This article analyzes hospital privatization by comparing costs and quality between different ownership forms. We put the attention on the distinction between public hospitals and private hospitals with public funding. Using information about Spanish hospitals, we have found that private hospitals provide services at a lower cost at expenses of lower quality. We observe that property rights theory is fulfilled at least for the Spanish hospital market. The way that Heath Authorities finance publicly funded hospitals may be responsible for the differences in incentives between public and private centers. We argue that the trade-off between costs and quality could be minimized by designing financing contracts with fixed and variable components.

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Paper provided by University of Barcelona, Research Institute of Applied Economics in its series IREA Working Papers with number 201012.

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Length: 38 pages
Date of creation: Sep 2010
Date of revision: Sep 2010
Handle: RePEc:ira:wpaper:201012
Contact details of provider: Postal: Tinent Coronel Valenzuela, Num 1-11 08034 Barcelona
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  1. Lien, Hsien-Ming & Chou, Shin-Yi & Liu, Jin-Tan, 2008. "Hospital ownership and performance: Evidence from stroke and cardiac treatment in Taiwan," Journal of Health Economics, Elsevier, vol. 27(5), pages 1208-1223, September.
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