Payment contracts in a preventive health care system: A perspective from Operations Management

Reza Yaesoubi and Stephen D. Roberts

Journal of Health Economics, 2011, vol. 30, issue 6, 1188-1196

Abstract: We consider a health care system consisting of two noncooperative parties: a health purchaser (payer) and a health provider, where the interaction between the two parties is governed by a payment contract. We determine the contracts that coordinate the health purchaser–health provider relationship; i.e. the contracts that maximize the population's welfare while allowing each entity to optimize its own objective function. We show that under certain conditions (1) when the number of customers for a preventive medical intervention is verifiable, there exists a gate-keeping contract and a set of concave piecewise linear contracts that coordinate the system, and (2) when the number of customers is not verifiable, there exists a contract of bounded linear form and a set of incentive-feasible concave piecewise linear contracts that coordinate the system.

Keywords: Health care payment system; Coordinating contracts; Welfare; Mechanism design; Principal–agent model; Preventive care (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhecon:v:30:y:2011:i:6:p:1188-1196

DOI: 10.1016/j.jhealeco.2011.08.009

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