The optimal payment system for hospitals under adverse selection, moral hazard, and limited liability

François Maréchal () and Lionel Thomas ()
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François Maréchal: CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]
Lionel Thomas: CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]

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Abstract: This paper studies the optimal contract offered by a regulator to a partially altru- istic hospital under adverse selection, moral hazard, and limited liability. We consider that the hospital privately observes the severity of illness of patients and chooses a hidden quality that influences the probability of some complications or comorbidities (CCs) occurring. We analyze 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 CCs.

Keywords: Hospital regulation; adverse selection; moral hazard; limited liability (search for similar items in EconPapers)
Date: 2019
Note: View the original document on HAL open archive server: https://univ-fcomte.hal.science/hal-04544327v1
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