Adoption in Health Care – The
Role of Payment Systems
examines the incentive to adopt a new technology
from common payment systems, namely mixed cost
reimbursement and DRG
reimbursement. Adoption is based on a cost–benefit
criterion. We find that retro-
spective payment systems require a large enough patient
benefit to yield adoption,
while under DRG-linked payment, adoption may arise in
the absence of patients
benefits when the differential reimbursement for the old
vs new technology is
large enough. Also, mixed cost reimbursement leads to
higher adoption under
conditions on the differential reimbursement levels and
patient benefits. In policy
terms, mixed cost reimbursement system may be more
effective than a DRG
payment system to induce technology adoption. Our
analysis also shows that
current economic evaluation criteria for new
technologies do not capture the
different ways payment systems influence technology
adoption. This gives a
new dimension to the discussion of prospective vs
retrospective payment systems
of the last decades centered on the debate of quality vs
público-privada en sanidad
La colaboración público-privada es un
contrato entre un organismo público y una empresa
privada cuyo objetivo es la producción y/o
distribución de servicios públicos. Estos acuerdos
exigen la implementación de estrictos mecanismos de
control y seguimiento del contenido del acuerdo por
ambas partes. Estos mecanismos de control deben
delegarse a un agente externo a quien las partes
provean la información necesaria de sus respectivas
actividades. En el caso en que se prevea que estos
mecanismos de control no van a ser eficaces, es mejor
no iniciar la colaboración.
Los acuerdos de colaboración público-privada en el
sector de la sanidad se utilizan en todo el mundo como
un mecanismo para mejorar la provisión y la calidad de
los servicios de salud. Estos acuerdos si están
adecuadamente gestionados, aportan beneficios al
sector público en términos de reducción de costes y de
riesgos en proyectos de provisión de servicios de
salud; para el sector privado representan
oportunidades de negocio; y para los ciudadanos
representan el acceso a más y mejores servicios sin
que ello implique mayor presión fiscal.
endowments in entrepreneurial partnership
This paper discusses
a novel argument to interpret the importance of
thinking of collaborative partnerships in
pre-competitive agreements. To do so, we adopt a
dynamic iterative process to model technology
diffusion between the partners of an agreement. We
find that the success of an agreement of a given
length hinges around identifying the suitable
efficient combinations of the initial
technological endowments of partners. As the time
horizon of the agreement expands, the probability
of identifying a suitable partner decreases, thus
justifying the prevalence of short-horizon R&D
a third party payer (be it a private insurer or a
national health service) contracts with health
providers, the third party payer (3PP) may make
special agreements with a subset of "preferred
providers". The consumers affiliated to the 3PP then
have cheaper (or even free) access to these
preferred providers than to other providers. This
chapter analyzes how providers compete to become
Contractual design and PPPs for
hospitals: lessons for the Portuguese model.
the Portuguese Government announced the launching of
public-private partnerships (PPPs) to build
hospitals with the distinctive feature that
infrastructure construction and clinical activities
management will be awarded to separate private
parties. Also, one of the parties will be in charge of
providing soft facilities. We explore alternative
configurations of contracts and assess whether the
equilibrium allocations attain the first-best
insurance and the cost-sharing of pharmaceutical R&D.
Ramsey pricing has been
proposed in the pharmaceutical industry as a principle to
price discriminate among markets while allowing to recover
the (fixed) R&D cost. However, such analyses neglect the
presence of insurance or the fund raising costs for most of
drug reimbursement. By incorporating these new elements, we
aim at providing some building blocks towards an
economic theory incorporating Ramsey pricing and insurance
coverage. We show how coinsurance affects the optimal prices
to pay for the R&D investment. We also show that under
certain conditions, there is no strategic incentive by
governments to set coinsurance rates in order to shift the
financial burden of R&D. This will have important
implications to the application of Ramsey pricing principles
to pharmaceutical products across countries.
Negotiation and Bargaining in Health Care.
Negotiation over contractual
terms, including prices as one major element, becomes a
relevant issue in the analysis of performance of health
care systems. Both empirical and theoretical analysis have
been produced, and are reviewed below. This chapter does not aim to
be an encyclopedic view of the existing literature on
bargaining in health care. Instead, we try to motivate the
reader for the new developments associated with explicit
bargaining between third-party payers and providers of
health care (a relation which is, in itself, only one in
many that exist in the health care sector).
and Idle Public Sector Capacity in Health Care.
A feature present in countries with a
National Health Service is the co-existence of a public and
a private sector. Often, the public payer contracts with
private providers while holding idle capacity. This is often
seen as inefficiency from the management of public
facilities. We present here a different rationale for the
existence of such idle capacity: the public sector may opt
to have idle capacity as a way to gain bargaining power
vis-\`a-vis the private provider, under the assumption of a
more efficient private than the public sector.
technologies and Location.
We present a simple model of
spatial competition to analyze the impact of a structural change
in transaction (transportation) costs on the location of firms.
The distinctive feature of the model is the existence of two
markets which are non-connected. This means that a firm willing to
sell in the other market must take into account a fixed fee in
addition to the usual quadratic transport costs. Two different
formulations for quadratic costs are explored, yielding different
results for location analysis. In particular, the principle of
maximum differentiation may not hold depending on the nature of
Preventive health care and payment
systems to providers.
been a main issue of recent policy orientations in health care.
This renews the interest on how different organizational designs
and the definition of payment schemes to providers may affect the
incentives to provide preventive health care.
We focus on the
externality resulting from referral decisions from primary to
acute care providers. This makes our analysis complementary to
most works in the literature allowing to address in a more direct
way the issue of preventive health care. The analysis is performed
through a series of examples combining different payment schemes
at the primary care center and hospital. When hospitals are
reimbursed according to costs, prevention efforts are unlikely to
occur. However, under a capitation payment for the primary care
center and prospective budget for the hospital, prevention
effortsincrease when shifting from an independent to an integrated
management. Also, from a normative standpoint, optimal
payment schemes are simpler under joint management.
Negotiation Advantages of Professional
Associations in Health Care.
instances, third-party payers negotiate prices of health care
services with providers. We show that a third-party payer may
prefer to deal with a professional association than with the
sub-set constituted by the more efficient providers, and then
apply the same price to all providers. The reason for this is the
increase in the bargaining position of providers. The more
efficient providers are also the ones with higher profits in the
event of negotiation failure. This allows them to extract a higher
surplus from the third-party payer.
Health Care Providers: "Any Willing Provider" vs. Negotiation.
We address the
question of how a third-party payer (e.g. an insurer) decides what
providers to contract with. Two different mechanisms are studied
and their properties compared. A first mechanism consists of the
so-called “any willing provider” where the third-party payer
announces a contract and every provider freely decides to sign it
or not. The second mechanism is a bargaining procedure with both
providers set up by the third-party payer. The main finding is
that the decision of the third-party payer depends on the surplus
to be shared. When it is relatively high the third-party payer
prefers the any willing provider system. When, on the contrary,
the surplus is relatively low, the third-party payer will select a
Private Provision of Health Care.
One of the
mechanisms that is implemented in the cost containment wave in the
health care sectors in western countries is the definition, by the
third-party payer, of a set of preferred providers. The insured
patients have different access rules to such providers when ill.
The rules specify the co-payments patients must pay when
using an out-of-plan care provider. This paper studies the
competitive process among providers in terms of both prices and
qualities. Competition is influenced by the status of providers as
in-plan or out-of-plan care providers. Also, there is a moral
hazard of provider choice related to the trade-off between freedom
to choose and the need to hold down costs.
It is possible to
achieve the first-best allocation by an appropriate definition of
the reimbursement scheme when decisions on prices and qualities
are taken simultaneously (that we relate to primary health care
sectors). In contrast, some type of regulation is needed to
achieve the optimal solution when decisions are sequential
(specialized health care sector). We also derive normative
conclusions on how price controls should be implemented in some
European Union Member States.
the Effects of Antidumping Legislation.
We show that the
nature and extent of trade is significantly affected by the
pricing policy that firms are allowed to employ. A switch from
discriminatory to non-discriminatory pricing (e.g. strict
antidumping laws) lead to a switch from two-way trade to one-way
trade. It is far from necessarily being the case that the
consumers will be favoured by such policy switch. It is also the
case that distribution of gains is significantly affected by
relative country size.
Role of Information in Licensing Contract Design.
analyzes the contract terms of licensing agreements, based on a
sample of contracts of transmission of technology between Spanish
and foreign firms. It also presents a model that is in accordance
with some stylized facts. We will focus our attention on the
elements that explain the contract terms. In particular we analyze
the consequences of the inclusion of know-how in the license
agreement on the contract terms.
at Variable Rhythms.
This note presents
a modification of Rubinstein's model in which players can choose
whether to be fast or slow in responding to their opponents's
proposals. We characterize the effects of such choice on the
outcome of the bargaining and give predictions on what rhythm will
players choose in equilibrium.
del Mercado Unico sobre los Sectores Industriales Españoles.
analiza los efectos del proceso de incorporación de España a la
CEE y de la futura creación del Mercado Unico sobre la Industria
Española. Algunos sectores industriales han sufrido en el proceso,
otros han superado mejor la prueba. En cualquier caso, la
inversión directa y las adquisiciones de empresas con fondos
procedentes del extrerior han atenuado los costes de la
integración. Los efectos más negativos más importantes ya han
tenido lugar y no se producirán con tanta intensidad durante la
construcción del Mercado Unico
Multiproducto, Competencia en Precios y Localización.
El análisis de
empresas multiproducto en modelos espaciales à la Hotelling donde
los costes de transporte se definen como funciones cuadráticas de
la distancia, nos muestra que las empresas no tienen incentivos
para proliferar sus productos. El objetivo de esta nota es
examinar la robustez de este resultado introduciendo diferentes
escenarios, tanto en términos de la especificación del espacio
(unidimensional), como de la función de costes de transporte.
Demostramos que tal resultado es robusto a la definición del
espacio pero no lo es bajo formas más generales de los costes de
la Diferenciación de Producto: Una guía selectiva de la
Competition in Markets for Dichotomous Substitutes.
The paper deals
with price rivalry between two sellers of a differentiated good.
Each firm occupies one of the two possible locations in the
characteristics space considered. This resembles real situations
like the choice between dichotomous substitutes, or examples
coming from spatial economics. The consumers' population is
partitioned in two groups according to preferences and the
population density is constituted by two atoms. Transportation
costs vary across consumers. Nevertheless, the resulting firms'
demand functions share the continuity property. At a
non-cooperative equilibrium the prices of the two goods differ and
some consumers who rank highest the more popular brand find it
convenient to purchase the less expensive alternative. Higher
one-firm concentration ratios are found to be consistent with
lower equilibrium prices. This last feature is verified comparing
the non-cooperative outcomes stemming from different original
Brand Proliferation with Vertical Differentiation.
It is known that
under horizontal differentiation whenever firms decide
sequentially upon locations and prices, they give up the
possibility of proliferation.We propose a spatial model of
vertical differentiation to check the robustness of such an
outcome to the specification of product differentiation.
Price Competition Dominate Market Segmentation?.
This note analyses
duopoly competition in a two stage (location-price) game, while
allowing each firm to establish a couple of outlets. Both the
circle and the line model of spatial competition are considered.
Our main result is clear-cut: in equilibrium neither firm will
take up the opportunity of opening two stores. This is a warning
that market segmentation, i.e. competition for multiple outlets,
might not be attractive at all, because it entails more intense