Provider choice of quality and surplus

Nolan Miller (), Karen Eggleston and Richard Zeckhauser

International Journal of Health Economics and Management, 2006, vol. 6, issue 2, 103-117

Abstract: We study the quality choices of institutional health-care providers, such as hospitals, assuming that the utility function of the key organizational decision maker includes both quality of care and financial surplus. We are primarily concerned with how changes in outside claims—particularly proportional outside claims—on the provider’s financial surplus affect his choice of quality. We use the term “rate of surplus retention” to refer to the fraction of surplus remaining after deducting all such claims. Using the Arrow-Pratt coefficient of relative risk aversion as a measure of curvature of the provider’s utility-from-money function, we show that increasing the surplus retention rate increases (decreases) quality if the provider’s coefficient of relative risk aversion is greater than (less than) 1. Copyright Springer Science + Business Media, LLC 2006

Keywords: Quality; Surplus; Risk aversion; Surplus retention; Provider maximization; Nonprofit; For-profit (search for similar items in EconPapers)
Date: 2006
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://hdl.handle.net/10.1007/s10754-006-7107-7 (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Provider Choice of Quality and Surplus (2003)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:ijhcfe:v:6:y:2006:i:2:p:103-117

Ordering information: This journal article can be ordered from
http://www.springer. ... th/journal/10754/PS2

DOI: 10.1007/s10754-006-7107-7

Access Statistics for this article

International Journal of Health Economics and Management is currently edited by Leemore Dafny, Robert Town, Mark Pauly, David Dranove and Pedro Pita Barros

More articles in International Journal of Health Economics and Management from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().