The payment of hospital services: a waiting lists model

Alessandra Ferrari
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Alessandra Ferrari: Department of Economics, University of Reading

Economic Analysis Research Group Working Papers from Henley Business School, University of Reading

Abstract: This paper analyses the incentive properties of prospective payment systems for hospital contracts, a key feature in many health systems' reforms. Building on current literature, the model explicitly allows for the existence of waiting time, modelled as adversely affecting patients' utility and therefore reducing social welfare. The model shows that rewarding hospitals for their demand leads to the first best solution, identified with respect to the relevant quality and quantity variables. The additional separate payment of a price per case is instead required when the social cost of waiting is introduced alongside the private costs. 1. Introduction. The last two decades have witnessed major changes in the organisation of health services. Various factors, among which the aging of the population and technical progress, led to growing demand levels and expectations; then to discontent, cost increases and general financial crisis. In general terms this scenario has characterised

JEL-codes: I11 L11 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2004
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