Two-part payments for the reimbursement of investments in health technologies

Rosella Levaggi, Michele Moretto and Paolo Pertile

Health Policy, 2014, vol. 115, issue 2, 230-236

Abstract: The paper studies the impact of alternative reimbursement systems on two provider decisions: whether to adopt a technology whose provision requires a sunk investment cost and how many patients to treat with it. Using a simple economic model we show that the optimal pricing policy involves a two-part payment: a price equal to the marginal cost of the patient whose benefit of treatment equals the cost of provision, and a separate payment for the partial reimbursement of capital costs. Departures from this scheme, which are frequent in DRG tariff systems designed around the world, lead to a trade-off between the objective of making effective technologies available to patients and the need to ensure appropriateness in use.

Keywords: DRG; Prospective payment; Appropriateness; Capital cost; Health care investment (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:hepoli:v:115:y:2014:i:2:p:230-236

DOI: 10.1016/j.healthpol.2013.10.006

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