Health provider networks, quality and costs

Jan Boone and Christoph Schottmüller

No 15-02, Discussion Papers from University of Copenhagen. Department of Economics

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: selective contracting; exclusive contracts; common contracts; managed care; health care quality; signaling (search for similar items in EconPapers)
JEL-codes: I11 L13 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2015-01-31
New Economics Papers: this item is included in nep-com
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http://www.econ.ku.dk/english/research/publications/wp/dp_2015/1502.pdf (application/pdf)

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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Persistent link: https://EconPapers.repec.org/RePEc:kud:kuiedp:1502

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