We study the impact of different contractual arrangements within the hospital on the optimal contracts designed by third party payers when severity is hospital's private information. We develop a multi-issue bargaining process between doctors and managers within the hospital. Results are then...

Within a horizontally differentiation model and allowing for heterogeneous qualities, we analyze the effects of reference pricing reimbursement on firms’ pricing strategies. With this analysis we find inherent incentives for firms’ pricing behaviour, and consequently we shed some light on...

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...

We analyse incentives for collusive behaviour when heterogeneous providers are faced with regulated prices under two forms of yardstick competition, namely discriminatory and uniform schemes. Providers are heterogeneous in the degree to which their interests correspond to those of the regulator,...

The English government has encouraged private providers – known as Independent Sector Treatment Centres (ISTCs) – to treat publicly funded (NHS) patients. Providers are paid a fixed price per patient treated, adjusted to reflect geographical differences in input costs. But there may be other...

Within a horizontally differentiation model, we analyse the relative effects of reference pricing and copayment reimbursement on firms pricing and quality strategies as well as on market coverage under different market structures: competitive market, local monopolies and exogenous full market...

Recently the English NHS has introduced an activity-based payment scheme for secondary care - the Payment by Results (PbR) policy. In this paper we discuss, from an economic perspective, the main intended and unintended incentives created by this policy. We also outline the role of different NHS...