If public funds are allocated efficiently , then an increase in expenditure should improve the performance of substance abuse treatment programs. However, the unconditional correlation between performance and expenditures per patient is non-positive in the data sets used in this paper. One...

This paper compares the cost and quality incentive effects of cost reimbursement and prospective payment systems in the health industru when providers are altuistic. Provider's behavioral rule is governed by a desire to maximize a weighted sum of profit and consumers' health benefit.