The payment of hospital services: a waiting lists model

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

No em-dp2004-25, Economics Discussion Papers from Department of Economics, 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.

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