Asymmetric information and pooling contracts in hospital sector
Mougeot, Michel; Naegelen, Florence (2014), Asymmetric information and pooling contracts in hospital sector, JITE : Journal of Institutional and Theoretical Economics, 170, 2, p. 365-386. http://dx.doi.org/10.1628/093245614X13826128096866
TypeArticle accepté pour publication ou publié
Journal nameJITE : Journal of Institutional and Theoretical Economics
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Abstract (EN)Most of regulators in health care systems use pooling contracts such that payment do not depend on the level of severity. This policy is motivated by concerns about the moral hazard problem. In this paper, we show that it can be optimal when patient severity is private information because of the non-responsiveness phenomenon. We show in which cases the hospital may be non responsive to the regulator objective under adverse selection. We exhibit necessary conditions under which pooling contracts are optimal and we characterize these mechanisms when the hospital is self-interested and perfectly altruistic. In the first case, the fixed payment is equal to the cost of treating the patient with the highest severity whereas it is equal to the mean value of the treatment cost in the second one.
Subjects / KeywordsHospital regulation; patient severity; non-responsiveness; altruism; adverse selection
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