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Medical Errors: Getting the Incentives Right

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  • Sverre Grepperud

Abstract

This work examines the role of penalties as providers of incentives to prevent medical errors and ensure that such incidents, once they occur, become common knowledge. It is shown that a scheme with two penalties (accountability and non-report) induces the first-best solution. However, this scheme does not necessarily imply a punitive environment, but may, under given circumstances, yield insignificant and even negative penalties. Alternative sanction systems, such as voluntary reporting and immunity, are found to have less desirable properties. An exception is confidentiality (anonymity) which turns out to be an optimal scheme. Finally, the examination of various penalty restrictions (scope and scale) shows that such barriers may promote both tougher and softer sanction schemes. Copyright Springer Science + Business Media, Inc. 2005

Suggested Citation

  • Sverre Grepperud, 2005. "Medical Errors: Getting the Incentives Right," International Journal of Health Economics and Management, Springer, vol. 5(4), pages 307-326, December.
    • Handle: RePEc:kap:ijhcfe:v:5:y:2005:i:4:p:307-326
    DOI: 10.1007/s10754-005-3984-4
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    Cited by:

    1. Kang, HeeChung & Hong, JaeSeok & Lee, KwangSoo & Kim, Sera, 2010. "The effects of the fraud and abuse enforcement program under the National Health Insurance program in Korea," Health Policy, Elsevier, vol. 95(1), pages 41-49, April.
    2. Sverre Grepperud, 2005. "Medical Errors: Mandatory Reporting, Voluntary Reporting, or Both?," European Journal of Law and Economics, Springer, vol. 20(1), pages 99-112, July.

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    More about this item

    Keywords

    reporting incentives; immunity; confidentiality; voluntary reporting;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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