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Heterogeneity of Hospitals

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Date
2014
Dewey
Economie sociale
Sujet
Diagnosis related group (DRG); Efficiency; Exogenous/endogenous cost variability; Heterogeneity; Hospital cost; Moral hazard; Patient selection; Prospective payment system; Quality; Yardstick competition
JEL code
I.I1.I11
DOI
http://dx.doi.org/10.1016/B978-0-12-375678-7.01314-6
Book title
Encyclopedia of Health Economics
Author
Culyer, Anthony J.
Publisher
Elsevier
Publisher city
Amsterdam
Year
2014
Pages number
604
ISBN
978-0-12-375679-4
URI
https://basepub.dauphine.fr/handle/123456789/20462
Collections
  • LEDa : Publications
Metadata
Show full item record
Author
Dormont, Brigitte
163511 Laboratoire d'Economie de Dauphine [LEDa]
163517 Laboratoire d'Economie et de Gestion des Organisations de Santé [Legos]
Type
Chapitre d'ouvrage
Item number of pages
456-461
Abstract (EN)
Payment methods based on a fixed price per diagnosis related group provide hospitals with a perfect incentive for cost reduction. However, costs can rise for some hospitals because of exogenous factors. This situation may bring them to select patients and lower care quality to avoid bankruptcy. To prevent this, payments should allow for legitimate sources of cost heterogeneity. It is possible to design a payment method which allows for unobservable sources of cost heterogeneity, provided they are time invariant. While it reimburses hospitals for extra costs resulting from undesirable long-term moral hazard, this method can induce substantial savings because it provides incentives to reduce costs linked to transitory moral hazard.

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