Online citations, reference lists, and bibliographies.
← Back to Search

Provider Behavior Under Prospective Reimbursement. Cost Sharing And Supply.

R. Ellis, T. Mcguire
Published 1986 · Business, Medicine

Save to my Library
Download PDF
Analyze on Scholarcy Visualize in Litmaps
Reduce the time it takes to create your bibliography by a factor of 10 by using the world’s favourite reference manager
Time to take this seriously.
Get Citationsy
This paper develops a model in which physicians choose the level of services to be provided to their patients. We show that if physicians undervalue benefits to patients relative to hospital profits, prospective payment, a system in which hospitals receive a payment dependent on the diagnosis-related group within which a patient falls, can lead to too few services being provided. In contrast, a 'cost-based' reimbursement system is shown to result in too many services being provided. Competition between hospitals for physicians will tend to augment both of these problems. We also examine a mixed reimbursement system, in which hospital reimbursements are paid partly prospectively and partly cost-based. This system is shown under a variety of circumstances to be superior to the other two reimbursement systems by improving the incentives for the efficient level of services, reducing incentives to unnecessarily admit or reclassify patients, and reducing risk to providers.
This paper references
E. Johnson (1935)
Applying economic concepts to hospital care
Paul Feldstein (1968)
Applying economic concepts to hospital
Feldstein (1968)
Toward a Theory of Nonprofit Institutions: An Economic Model of a Hospital
J. Newhouse (1970)
Medical insurance: A case study of the tradeoff between risk spreading and appropriate incentives☆
R. Zeckhauser (1970)
Hospital Cost Inflation: A Study of Nonprofit Price Dynamics
M. Feldstein (1971)
The Not-For-Profit Hospital as a Physicians' Cooperative
M. Pauly (1973)
Supplier-Induced Demand: Some Empirical Evidence and Implications
R. Evans (1974)
Supplier-induced demand: Some empirical evidence and impbations The economics of health care and medical care
R Evans (1974)
Risk Sharing and Incentives in the Principal and Agent Relationship
S. Shavell (1979)
Risk sharing and incentives in the principal-agent relationship
Shavell (1979)
The Economic Foundations of National Health Policy
J. Newhouse (1980)
Assessing the evidence on HMO performance.
H. Luft (1980)
DRG creep: a new hospital-acquired disease.
D. Simborg (1981)
Doctors and Their Workshops: Economic Models of Physician Behavior
H. Luft (1981)
The Twin Cities' medical marketplace.
J. Iglehart (1984)
Medicare hospital payment by diagnosis-related groups.
B. Vladeċk (1984)
A controlled trial of the effect of a prepaid group practice on use of services.
W. Manning (1984)
Medicare hospital pa_yment by dia8t@s=related groups
B. C. Vladeck (1984)
Is cost containment working?
K. Davis (1985)
Criteria for evaluating a case-mix classification system as a basis for prospective payment, Unpublished manuscript (Health Policy
McGuire (1985)
IS cm containment working
Davis (1985)
The Medicare case mix index increase: Medical practice changes, aging and DRG creep, R-3292-HCFA (The Rand Corporation, Santa Monica, CA) June
Carter (1985)
Competition among hospitals: Market structure and its relation to utilization, costs and financial position, DHMS Publication no. (PHS)
Dean Farley (1985)
Criteria for evaluating a case-mix classification system as a basis for prospective payment
Thomas G Mcguire (1985)
Criteria for evaluating a case-mix classification system as a basis for prospective payment, Unpublished manuscript
Thomas G Mcguire (1985)
Competition among hospitals: Market structure and its relation to utilization, costs and financial position
Dean Farley (1985)
The Medicare Case Mix Index Increase : Medical Practice Changes, Aging, and DRG Creep
Grace M. Carter (1985)
The Effect of Benefit Design on the Length of Stay of Medicaid Psychiatric Patients
R. G. Frank (1986)
The Medicare case mix index increase: Medical practice changes, aging and DRG creep, R-3292-HCFA (The Rand Corporation
Grace Carter

This paper is referenced by
Does higher Institutional Quality improve the Appropriateness of Healthcare Provision?
Giacomo De Luca (2021)
Efficiency, access, and the mixed delivery of health care services
C. Canta (2021)
Clinical Ambiguity and Conflicts of Interest in Interventional Cardiology Decision Making
Tinglong Dai (2021)
When Should You Trust Your Doctor? Establishing a Theoretical Model to Evaluate the Value of Second Opinion Visits
M. Halasy (2021)
The impact of medical complications on optimal hospital payment
François Maréchal (2021)
Measuring Quality Effects in Equilibrium
Seth Richards-Shubik (2021)
Nursing‐homes' competition and distributional implications when the market is two‐sided
D. Bardey (2021)
Opioid and non-opioid analgesic prescribing before and after the CDC’s 2016 opioid guideline
W. Encinosa (2021)
Providers preferences towards greater patient health benefit is associated with higher quality of care
S. Kacker (2021)
Do Electronic Health Record Systems Increase Medicare Reimbursements? The Moderating Effect of the Recovery Audit Program
Kartik K. Ganju (2021)
Allocation of health care under pay for performance: Winners and losers.
A. Oxholm (2021)
Docs with their eyes on the clock? The effect of time pressures on primary care productivity.
S. Freedman (2021)
Balance Billing as an Adherence to Treatment Signalling Device
Damien Besancenot (2021)
Does gender affect medical decisions? Results from a behavioral experiment with physicians and medical students
Geir Godager (2021)
An experiment on referrals in health care
Christian Waibel (2021)
Designing Payment Contracts for Healthcare Services to Induce Information Sharing: The Adoption and the Value of Health Information Exchanges (HIEs)
M. Ayvaci (2021)
Rankings in Healthcare Organizations
Katharina Huesmann (2020)
The Impacts of Restricting Mobility of Skilled Service Workers
Kurt Lavetti (2020)
The economics of mental health: from risk factors to financing
Maria Ana Bártolo Coelho Ramalho Matias (2020)
Discontinuous system of allowances: The response of prosocial health-care professionals
Helena M Hernández-Pizarro (2020)
Location choice and quality competition in mixed hospital markets
Burkhard Hehenkamp (2020)
Optimal Contracting with Altruistic Agents
M. Gaynor (2020)
The Business of Healthcare: The Role of Physician Integration in Bundled Payments
J. Vlachý (2020)
Optimal Contracting with Altruistic Agents: A Structural Model of Medicare Payments for Dialysis Drugs
M. Gaynor (2020)
The effects of unexpected changes in demand on the performance of emergency departments.
A. Turner (2020)
Do public and private hospitals differ in quality? Evidence from Italy
F. Moscone (2020)
Clinical Ambiguity and Conflicts of Interest in Interventional Cardiology Decision-Making
Tinglong Dai (2020)
Survival of altruistic gatekeepers: Kickbacks in medical markets
E. Amann (2020)
The best of both worlds? The economic effects of a hybrid fee-for-service and prospective payment reimbursement system.
R. Fu (2020)
Alternative payment models and innovation: a case study of US health system adoption of a sacubitril/valsartan to treat acute decompensated heart failure
J. Shafrin (2020)
Vorschläge für eine auf die Bedürfnisse der Patienten ausgerichtete Mengensteuerung
M. Bäuml (2020)
Profession and deception: Experimental evidence on lying behavior among business and medical students
Damien Besancenot (2020)
See more
Semantic Scholar Logo Some data provided by SemanticScholar