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The impact of medical complications on optimal hospital payment

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  • François Maréchal
  • Lionel Thomas

Abstract

This paper studies the optimal payment policy offered by a regulator to a partially altruistic hospital when the latter privately observes the severity of illness of patients and chooses a hidden quality that influences the probability of medical complications occurring. We analyze how the level of altruism of the hospital affects the conditions under which the payment, for a given diagnosis‐related group, should be refined according to the severity of illness and the occurrence of complications.

Suggested Citation

  • François Maréchal & Lionel Thomas, 2021. "The impact of medical complications on optimal hospital payment," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(6), pages 1144-1173, December.
    • Handle: RePEc:bla:jpbect:v:23:y:2021:i:6:p:1144-1173
    DOI: 10.1111/jpet.12530
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    Cited by:

    1. Rosella Levaggi & Michele Moretto & Paolo Pertile, 2023. "Dynamic, incentive-compatible contracting for health services," Working Papers 2023.16, Fondazione Eni Enrico Mattei.

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