Miraldo, Marisa, Siciliani, Luigi orcid.org/0000-0003-1739-7289 and Street, Andrew David orcid.org/0000-0002-2540-0364 (2008) Price adjustment in the hospital sector. Working Paper. CHE Research Paper . Centre for Health Economics, University of York , York, UK.
Abstract
Prospective payment systems are currently used in many OECD countries, where hospitals are paid a fixed price for each patient treated. We develop a theoretical model to analyse the properties of the optimal fixed prices to be paid to hospitals when no lump-sum transfers are allowed and when the price can differ across providers to reflect observable exogenous differences in costs (for example land, building and staff costs). We find that: a) when the marginal benefit from treatment is decreasing and the cost function is the (commonly used) power function, the optimal price adjustment for hospitals with higher costs is positive but partial; if the marginal benefit from treatment is constant, then the price is identical across providers; b) if the cost function is exponential, then the price adjustment is positive even when the marginal benefit from treatment is constant; c) the optimal price is lower when lump-sum transfers are not allowed, compared to when they are allowed; d) higher inequality aversion of the purchaser is associated with an increase in the price for the high-cost providers and a reduction in the price of the low-cost providers.
Metadata
Item Type: | Monograph |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | CHE Research Paper 41 |
Keywords: | Price adjustment,Hospitals,DRGs |
Dates: |
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Institution: | The University of York |
Academic Units: | The University of York > Faculty of Social Sciences (York) > Centre for Health Economics (York) The University of York > Faculty of Social Sciences (York) > Economics and Related Studies (York) The University of York > Faculty of Social Sciences (York) > Centre for Health Economics (York) > CHE Research Papers (York) |
Depositing User: | Pure (York) |
Date Deposited: | 12 Dec 2018 10:50 |
Last Modified: | 16 Oct 2024 11:35 |
Status: | Published |
Publisher: | Centre for Health Economics, University of York |
Series Name: | CHE Research Paper |
Related URLs: | |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:139810 |