IDEAS home Printed from https://ideas.repec.org/a/bla/jemstr/v7y1998i1p127-137.html
   My bibliography  Save this article

Health‐Care Payment Systems: Cost and Quality Incentives—Comment

Author

Listed:
  • Rajiv L. Sharma

Abstract

This note analyzes the incentives for cost reduction that different payment policies provide to profit‐maximizing health‐care providers. Ching‐to Albert Ma (1994) proposes a reimbursement mechanism that seeks to induce first‐best cost reduction by using a combination of cost reimbursement and prospective payment in a model where higher effort on the part of the health‐care provider reduces treatment costs. This note shows that a mechanism of this type, generally, will not result in first‐best cost reduction. However, such a mechanism is optimal when the payer has efficiency and distributional concerns.

Suggested Citation

  • Rajiv L. Sharma, 1998. "Health‐Care Payment Systems: Cost and Quality Incentives—Comment," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(1), pages 127-137, March.
    • Handle: RePEc:bla:jemstr:v:7:y:1998:i:1:p:127-137
    DOI: 10.1111/j.1430-9134.1998.00127.x
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/j.1430-9134.1998.00127.x
    Download Restriction: no
    File URL: https://libkey.io/10.1111/j.1430-9134.1998.00127.x?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Ma, Ching-to Albert, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(1), pages 93-112, Spring.
    2. 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.
    3. repec:bla:jemstr:v:3:y:1994:i:1:p:93-112:a is not listed on IDEAS
    4. Joseph P. Newhouse, 1996. "Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1236-1263, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ching‐to Albert Ma, 1998. "Health‐Care Payment Systems: Cost and Quality Incentives—Reply," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 7(1), pages 139-142, March.
    2. François MARECHAL & Michel MOUGEOT, 2004. "Risk sharing and moral hazard under prospective payment to hospitals: how to reimburse services for outlier patients," Cahiers de Recherches Economiques du Département d'économie 04.03, Université de Lausanne, Faculté des HEC, Département d’économie.
    3. Amir Shmueli & Jacob Glazer, 1999. "Addressing the inequity of capitation by variable soft contracts," Health Economics, John Wiley & Sons, Ltd., vol. 8(4), pages 335-343, June.
    4. David E. M. Sappington & Tracy R. Lewis, 1999. "Using Subjective Risk Adjusting to Prevent Patient Dumping in the Health Care Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 8(3), pages 351-382, September.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Barros, Pedro Pita, 2003. "Cream-skimming, incentives for efficiency and payment system," Journal of Health Economics, Elsevier, vol. 22(3), pages 419-443, May.
    2. Sonja Ossig & Eberhard Feess, 2004. "The impact of liability for malpractice on the optimal reimbursement schemes for health services," Econometric Society 2004 Far Eastern Meetings 396, Econometric Society.
    3. Shen, Yujing & Ellis, Randall P., 2002. "Cost-minimizing risk adjustment," Journal of Health Economics, Elsevier, vol. 21(3), pages 515-530, May.
    4. David Crainich & Hervé Leleu & Ana Mauleon, 2011. "Hospital’s activity-based financing system and manager: physician interaction," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(5), pages 417-427, October.
    5. Tsuyoshi Takahara, 2016. "Patient dumping, outlier payments, and optimal healthcare payment policy under asymmetric information," Health Economics Review, Springer, vol. 6(1), pages 1-11, December.
    6. Feess, Eberhard & Ossig, Sonja, 2007. "Reimbursement schemes for hospitals, malpractice liability, and intrinsic motivation," International Review of Law and Economics, Elsevier, vol. 27(4), pages 423-441, December.
    7. Hennig-Schmidt, Heike & Selten, Reinhard & Wiesen, Daniel, 2011. "How payment systems affect physicians' provision behaviour--An experimental investigation," Journal of Health Economics, Elsevier, vol. 30(4), pages 637-646, July.
    8. Pablo Picasso, 2000. "Capitation," Macroeconomics 0004064, University Library of Munich, Germany, revised 24 Feb 2002.
    9. Vrangbaek, Karsten & Bech, Mickael, 2004. "County level responses to the introduction of DRG rates for "extended choice" hospital patients in Denmark," Health Policy, Elsevier, vol. 67(1), pages 25-37, January.
    10. Jack, William, 2001. "Controlling selection incentives when health insurance contracts are endogenous," Journal of Public Economics, Elsevier, vol. 80(1), pages 25-48, April.
    11. Olga Milliken & Rose Anne Devlin & Vicky Barham & William Hogg & Simone Dahrouge & Grant Russell, 2008. "Comparative Efficiency Assessment of Primary Care Models Using Data Envelopment Analysis," Working Papers 0802E, University of Ottawa, Department of Economics.
    12. François MARECHAL & Michel MOUGEOT, 2004. "Risk sharing and moral hazard under prospective payment to hospitals: how to reimburse services for outlier patients," Cahiers de Recherches Economiques du Département d'économie 04.03, Université de Lausanne, Faculté des HEC, Département d’économie.
    13. Wang, Jian & Iversen, Tor & Hennig-Schmidt, Heike & Godager, Geir, 2020. "Are patient-regarding preferences stable? Evidence from a laboratory experiment with physicians and medical students from different countries," European Economic Review, Elsevier, vol. 125(C).
    14. Bech, Mickael, 2003. "Politicians' and hospital managers' trade-offs in the choice of reimbursement scheme: a discrete choice experiment," Health Policy, Elsevier, vol. 66(3), pages 261-275, December.
    15. Kesteloot, K. & Voet, N., 1998. "Incentives for cooperation in quality improvement among hospitals--the impact of the reimbursement system," Journal of Health Economics, Elsevier, vol. 17(6), pages 701-728, December.
    16. Bardey, David & Canta, Chiara & Lozachmeur, Jean-Marie, 2010. "Health Care Providers Payments Regulation when Horizontal and Vertical Differentiation Matter," IDEI Working Papers 532, Institut d'Économie Industrielle (IDEI), Toulouse.
    17. Zhang, Xue & Sweetman, Arthur, 2018. "Blended capitation and incentives: Fee codes inside and outside the capitated basket," Journal of Health Economics, Elsevier, vol. 60(C), pages 16-29.
    18. Ana, MAULEON & Laurent, COUDEVILLE & Benoit, DERVAUX, 2004. "Prospective payment system : consequences for hospital-physician interactions in the private sector," LIDAM Discussion Papers IRES 2004011, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
    19. 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.
    20. Lise Rochaix, 2004. "Les modes de rémunération des médecins," Revue d'Économie Financière, Programme National Persée, vol. 76(3), pages 223-239.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jemstr:v:7:y:1998:i:1:p:127-137. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.kellogg.northwestern.edu/research/journals/JEMS/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.