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Policy Implications Of Transferring Patients To Private Practice

  • Paula González

    (Universidad de Alicante)

We construct a model to analyze the willingness of Health Authorities to reach agreements with private hospitals to have some of their public sector patients treated there. When physicians are dual suppliers, we show that a problem of cream-skimming arises and reduces the incentives of the government to undertake such a policy. We argue that the more disperse the severities of the patients are, the greater the reduction in the incentives will be. Moreover, we characterize the distortion that the cream-skimming phenomenon imposes on the characteristics of the policy, when this is implemented.

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Paper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2002-12.

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Length: 44 pages
Date of creation: Jul 2002
Date of revision:
Publication status: Published by Ivie
Handle: RePEc:ivi:wpasad:2002-12
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  1. Gaynor, Martin, 1994. "Issues in the Industrial Organization of the Market for Physician Services," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 211-55, Spring.
  2. Ellis, Randall P. & McGuire, Thomas G., 1990. "Optimal payment systems for health services," Journal of Health Economics, Elsevier, vol. 9(4), pages 375-396, December.
  3. Hoel,M. & Soether,E.M., 2000. "Private health care as a supplement to a public health system with waiting time for treatment," Memorandum 41/2000, Oslo University, Department of Economics.
  4. Selden, Thomas M., 1990. "A model of capitation," Journal of Health Economics, Elsevier, vol. 9(4), pages 397-409, December.
  5. 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.
  6. Ellis, Randall P., 1998. "Creaming, skimping and dumping: provider competition on the intensive and extensive margins1," Journal of Health Economics, Elsevier, vol. 17(5), pages 537-555, October.
  7. Blomqvist, Ake, 1991. "The doctor as double agent: Information asymmetry, health insurance, and medical care," Journal of Health Economics, Elsevier, vol. 10(4), pages 411-432.
  8. Olivella, Pau, 2003. "Shifting public-health-sector waiting lists to the private sector," European Journal of Political Economy, Elsevier, vol. 19(1), pages 103-132, March.
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