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Cost efficiency in primary care contracting: A stochastic frontier cost function approach

The principal aim of this paper is to estimate a stochastic frontier cost function and an inefficiency effects model in the analysis of the primary health care services purchased by the public authority and supplied by 180 providers in 1996 in Catalonia. The evidence from our sample does not support the premise that contracting out has helped improve purchasing cost efficiency in primary care. Inefficient purchasing cost was observed in the component of this purchasing cost explicitly included in the contract between purchaser and provider. There are no observable incentives for the contracted-out primary health care teams to minimise prescription costs, which are not explicitly included in the present contracting system.

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Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Working Papers, Research Center on Health and Economics with number 719.

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Date of creation: Jul 2003
Handle: RePEc:upf:upfses:719
Contact details of provider: Web page: http://www.econ.upf.edu/

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  1. Rodriguez, Marisol & Scheffler, Richard M. & Agnew, Jonathan D., 2000. "An update on Spain's health care system: is it time for managed competition?," Health Policy, Elsevier, vol. 51(2), pages 109-131, March.
  2. Kumbhakar, Subal C. & Heshmati, Almas & Hjalmarsson, Lennart, 1997. "Temporal patterns of technical efficiency: Results from competing models," International Journal of Industrial Organization, Elsevier, vol. 15(5), pages 597-616, August.
  3. Jondrow, James & Knox Lovell, C. A. & Materov, Ivan S. & Schmidt, Peter, 1982. "On the estimation of technical inefficiency in the stochastic frontier production function model," Journal of Econometrics, Elsevier, vol. 19(2-3), pages 233-238, August.
  4. Battese, George E. & Coelli, Tim J., 1988. "Prediction of firm-level technical efficiencies with a generalized frontier production function and panel data," Journal of Econometrics, Elsevier, vol. 38(3), pages 387-399, July.
  5. Antonio Giuffrida & Hugh Gravelle, 2001. "Measuring performance in primary care: econometric analysis and DEA," Applied Economics, Taylor & Francis Journals, vol. 33(2), pages 163-175.
  6. Kodde, David A & Palm, Franz C, 1986. "Wald Criteria for Jointly Testing Equality and Inequality Restriction s," Econometrica, Econometric Society, vol. 54(5), pages 1243-1248, September.
  7. Battese, G E & Coelli, T J, 1995. "A Model for Technical Inefficiency Effects in a Stochastic Frontier Production Function for Panel Data," Empirical Economics, Springer, vol. 20(2), pages 325-332.
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