Optimal Healthcare Contracts: Theory and Empirical Evidence from Italy

57 Pages Posted: 11 Dec 2018

See all articles by Paolo Berta

Paolo Berta

University of Milano-Bicocca; University of Milan - Bicocca

Gianni De Fraja

Universita' di Roma; University of Nottingham; Centre for Economic Policy Research (CEPR)

Stefano Verzillo

European Commission, Joint Research Centre

Date Written: December 2018

Abstract

In this paper we investigate the nature of the contracts between a large health-care purchaser and health service providers in a prospective payment system. We model theoretically the interaction between patients choice and cream-skimming by hospitals. We test the model using a very large and detailed administrative dataset for the largest region in Italy. In line with our theoretical results, we show that the state funded purchaser offers providers a system of incentives such that the most efficient providers both treat more patients and also treat more difficult patients, thus receiving a higher average payment per treatment.

Keywords: Cream skimming, Hospitals, Lombardy, Optimal healthcare contracts, Patients choice

JEL Classification: D82, H42, I11, I18

Suggested Citation

Berta, Paolo and De Fraja, Gianni and De Fraja, Gianni and Verzillo, Stefano, Optimal Healthcare Contracts: Theory and Empirical Evidence from Italy (December 2018). CEPR Discussion Paper No. DP13357, Available at SSRN: https://ssrn.com/abstract=3298759

Paolo Berta (Contact Author)

University of Milano-Bicocca ( email )

Piazza dell’Ateneo Nuovo 1, 20126 Milano
Milano, 20126
Italy

University of Milan - Bicocca ( email )

Via Bicocca degli Arcimboldi, 8
Milano, Milano 20126
Italy

Gianni De Fraja

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Universita' di Roma ( email )

Dipartimento SEFEMEQ
Via Columbia n.2
Rome, Rome 00133
Italy

HOME PAGE: http://www.economia.uniroma2.it/docenti

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Stefano Verzillo

European Commission, Joint Research Centre ( email )

Via Fermi
Ispra, Varese 21027
Italy

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