In recent years, the performance-based approach to contracting for medical services has been gaining popu-larity across different healthcare delivery systems, both in the US (under the name of "Pay-for-Performance",or P4P), and abroad ("Payment-by-Results", or PbR, in the UK). One common element...

Our paper studies the role of the performance-based incentives in managing the effects of consolidation in healthcare markets. We consider a transition between the ``pre-merger'' market configuration where a payer manages a system with two competing hospitals and one of the two ``consolidated''...