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Health Provider Networks, Quality and Costs

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Listed:
  • Boone, J.

    (Tilburg University, School of Economics and Management)

  • Schottmuller, C.

    (Tilburg University, School of Economics and Management)

Abstract

We provide a modeling framework to think about selective contracting in the health care sector. Two health care providers differ in quality and costs. When buying health insurance, consumers observe neither provider quality nor costs. We derive an equilibrium where health insurers signal provider quality through their choice of provider network. Selective contracting focuses on low cost providers. Contracting both providers signals high quality. Market power tends to lower quality and lead to inefficiency. In a dynamic extension of the model, providers under-invest in quality while there can be both over and under-investment in cost reductions if there is a monopoly insurer while an efficient investment equilibrium exists with insurer competition.
(This abstract was borrowed from another version of this item.)
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Boone, J. & Schottmuller, C., 2015. "Health Provider Networks, Quality and Costs," Other publications TiSEM 2327d90d-af3a-49ae-8b0b-7, Tilburg University, School of Economics and Management.
  • Handle: RePEc:tiu:tiutis:2327d90d-af3a-49ae-8b0b-7345d84d76a5
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    References listed on IDEAS

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    Cited by:

    1. Boone, Jan & Douven, Rudy, 2014. "Provider competition and over-utilization in health care," CEPR Discussion Papers 10177, C.E.P.R. Discussion Papers.
    2. Boone, J. & Douven, R.C.M.H., 2014. "Provider Competition and Over-Utilization in Health Care," Other publications TiSEM 56362c38-f32c-45b9-93fc-1, Tilburg University, School of Economics and Management.

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    More about this item

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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