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dc.contributor.authorHafsteinsdottir, Elin Johanna Gudrun
dc.contributor.authorSiciliani, Luigi
dc.date.accessioned2011-01-18T13:16:17Z
dc.date.available2011-01-18T13:16:17Z
dc.date.issued2010-10-01
dc.date.submitted2011-01-18
dc.identifier.citationHealth Econ 2010, 19(10):1226-39en
dc.identifier.issn1099-1050
dc.identifier.pmid19780065
dc.identifier.doi10.1002/hec.1547
dc.identifier.urihttp://hdl.handle.net/2336/119705
dc.descriptionTo access publisher full text version of this article. Please click on the hyperlink in Additional Links fielden
dc.description.abstractWe present a model of contracting between a purchaser of health services and a provider (a hospital). We assume that hospitals provide two alternative treatments for a given diagnosis: a less intensive one (for example, a medical treatment) and a more intensive one (a surgical treatment). We assume that prices are set equal to the average cost reported by the providers, as observed in many OECD countries (yardstick competition). The purchaser has two options: (1) to set one tariff based on the diagnosis only and (2) to differentiate the tariff between the surgical and the medical treatment (i.e. to refine the tariff). We show that when tariffs are refined, the provider has always an incentive to overprovide the surgical treatment. If the tariff is not refined, the hospital underprovides the surgical treatment (and overprovides the medical treatment) if the degree of altruism is sufficiently low compared with the opportunity cost of public funds. Our main result is that price refinement might not be optimal.
dc.language.isoenen
dc.relation.urlhttp://dx.doi.org/10.1002/hec.1547en
dc.subject.meshDeveloped Countriesen
dc.subject.meshDiagnosis-Related Groupsen
dc.subject.meshHospital Costsen
dc.subject.meshHumansen
dc.subject.meshModels, Economicen
dc.subject.meshPatient Satisfactionen
dc.subject.meshSeverity of Illness Indexen
dc.titleDRG prospective payment systems: refine or not refine?en
dc.typeArticleen
dc.contributor.departmentDepartment of Economics and Related Studies, University of York, Heslington, York, UK. elinhaf@landspitali.isen
dc.identifier.journalHealth economicsen
html.description.abstractWe present a model of contracting between a purchaser of health services and a provider (a hospital). We assume that hospitals provide two alternative treatments for a given diagnosis: a less intensive one (for example, a medical treatment) and a more intensive one (a surgical treatment). We assume that prices are set equal to the average cost reported by the providers, as observed in many OECD countries (yardstick competition). The purchaser has two options: (1) to set one tariff based on the diagnosis only and (2) to differentiate the tariff between the surgical and the medical treatment (i.e. to refine the tariff). We show that when tariffs are refined, the provider has always an incentive to overprovide the surgical treatment. If the tariff is not refined, the hospital underprovides the surgical treatment (and overprovides the medical treatment) if the degree of altruism is sufficiently low compared with the opportunity cost of public funds. Our main result is that price refinement might not be optimal.


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