The impact of medical complications on optimal hospital payment

François Maréchal and Lionel Thomas

Journal of Public Economic Theory, 2021, vol. 23, issue 6, 1144-1173

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.

Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:bla:jpbect:v:23:y:2021:i:6:p:1144-1173

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