Designing the report card content for healthcare payment reduction

Tsuyoshi Takahara and Yutaka Kanda

MPRA Paper from University Library of Munich, Germany

Abstract: This study analyzes the effect of the content of report cards on the optimal incentivized payment for physicians. Our analysis assumes that report card disclosure builds a reputation regarding physicians' ability among patients who do not have the expertise to know better. Furthermore, we assume that the insurer designs a payment scheme that designates high-ability physicians to provide advanced treatment and low-ability physicians to provide a conventional treatment. We compare the benchmark (no disclosure) with two disclosure policies: detailed, where patients can recognize what service was provided and the outcome of the advanced treatment for all physicians, and limited, where patients can distinguish only physicians who provided the advanced treatment successfully. Our analysis shows that detailed disclosure requires a higher expected payment than the benchmark, and the insurer can save it by limiting the informativeness of the report. Intuitively, detailed disclosure conveys physician type more precisely, and the insurer must pay an additional wage for the conventional treatment provided by low-ability physicians. Our result implies that incentivization by non-monetary method (report card) and monetary method (pay-for-performance) may work in both complement and substitute.

Keywords: Principal-agent model; Reputation concern; Asymmetric information (search for similar items in EconPapers)
JEL-codes: D23 D86 I18 (search for similar items in EconPapers)
Date: 2023-09-08
New Economics Papers: this item is included in nep-cta, nep-des, nep-ger and nep-hea
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/118529/1/20230907.pdf original version (application/pdf)

Related works:
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:pra:mprapa:118529

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().