Health provider networks, quality and costs

Jan Boone and Schottmüller, Christoph
Authors registered in the RePEc Author Service: Christoph Schottmüller

No 10381, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: We provide a modeling framework to think about selective contracting in the health care sector. Two health care providers differ in quality and costs. When buying health insurance, consumers observe neither provider quality nor costs. We derive an equilibrium where health insurers signal provider quality through their choice of provider network. Selective contracting focuses on low cost providers. Contracting both providers signals high quality. Market power tends to lower quality and lead to inefficiency. In a dynamic extension of the model, providers under-invest in quality while there can be both over and under-investment in cost reductions if there is a monopoly insurer while an efficient investment equilibrium exists with insurer competition.

Keywords: Exclusive contracts; Health care quality; Managed care; Selective contracting; Signaling; Common contracts (search for similar items in EconPapers)
JEL-codes: D86 I11 L13 (search for similar items in EconPapers)
Date: 2015-02
New Economics Papers: this item is included in nep-com, nep-hea and nep-ias
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Health provider networks, quality and costs (2015)
Working Paper: Health Provider Networks, Quality and Costs (2015)
Working Paper: Health Provider Networks, Quality and Costs (2015)
Working Paper: Health Provider Networks, Quality and Costs (2015)
Working Paper: Health Provider Networks, Quality and Costs (2015)
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