Galizzi, Matteo M. and Miraldo, Marisa (2011) The effects of hospitals’ governance on optimal contracts: bargaining vs. contracting. Journal of Health Economics, 30 (2). pp. 408-424. ISSN 0167-6296
Abstract
We propose a two-stage model to study the impact of different hospitals’ governance frameworks on the optimal contracts designed by third-party payers when patients’ disease severity is the private information of the hospital. In the second stage, doctors and managers interact within either a bargaining or a contracting scenario. In the contracting scenario, managers offer a contract that determines the payment to doctors, and doctors decide how many patients to treat. In the bargaining scenario, doctors and managers strategically negotiate on both the payment to doctors and the number of patients to treat. We derive the equilibrium doctors’ payments and number of treated patients under both scenarios. We then derive the optimal contract offered by the government to the hospital in the first stage. Results show that when the cost of capital is sufficiently low, the informational rent is lower, and the social welfare is higher, in the contracting scenario.
| Item Type: | Article |
|---|---|
| Official URL: | http://www.journals.elsevier.com/journal-of-health... |
| Additional Information: | © 2011 Elsevier |
| Library of Congress subject classification: | H Social Sciences > HV Social pathology. Social and public welfare. Criminology |
| Journal of Economic Literature Classification System: | I - Health, Education, and Welfare > I1 - Health > I11 - Analysis of Health Care Markets I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy; Regulation; Public Health |
| Sets: | Departments > Social Policy Research centres and groups > LSE Health and Social Care |
| Date Deposited: | 19 Feb 2015 15:22 |
| URL: | http://eprints.lse.ac.uk/61005/ |
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