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Optimal Healthcare Contracts:Theory and Empirical Evidence from Italy

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Listed:
  • Berta, P.;
  • De Fraja, G.;
  • Verzillos, S.;

Abstract

In this paper we investigate the nature of the contracts between a large health-care purchaser and health service providers in a prospective payment system. We model theoretically the interaction between patients choice and cream-skimming by hospitals. We test the model using a very large and detailed administrative dataset for the largest region in Italy. In line with our theoretical results, we show that the state funded purchaser offers providers a system of incentives such that the most efficient providers both treat more patients and also treat more difficult patients, thus receiving a higher average payment per treatment.

Suggested Citation

  • Berta, P.; & De Fraja, G.; & Verzillos, S.;, 2018. "Optimal Healthcare Contracts:Theory and Empirical Evidence from Italy," Health, Econometrics and Data Group (HEDG) Working Papers 18/33, HEDG, c/o Department of Economics, University of York.
  • Handle: RePEc:yor:hectdg:18/33
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    References listed on IDEAS

    as
    1. Brenna, Elenka, 2011. "Quasi-market and cost-containment in Beveridge systems: The Lombardy model of Italy," Health Policy, Elsevier, vol. 103(2), pages 209-218.
    2. Paul J. Eliason & Paul L. E. Grieco & Ryan C. McDevitt & James W. Roberts, 2018. "Strategic Patient Discharge: The Case of Long-Term Care Hospitals," American Economic Review, American Economic Association, vol. 108(11), pages 3232-3265, November.
    3. Joseph G. Altonji & Ching-I Huang & Christopher R. Taber, 2015. "Estimating the Cream Skimming Effect of School Choice," Journal of Political Economy, University of Chicago Press, vol. 123(2), pages 266-324.
    4. Bayindir, Esra Eren, 2012. "Hospital ownership type and treatment choices," Journal of Health Economics, Elsevier, vol. 31(2), pages 359-370.
    5. Liran Einav & Amy Finkelstein & Neale Mahoney, 2017. "Provider Incentives and Healthcare Costs: Evidence from Long-Term Care Hospitals," NBER Working Papers 23100, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    patients choice; cream skimming; optimal healthcare contracts; hospitals; Lombardy;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods

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