Hospital's Activity-Based Financing System and Manager-Physician Interaction
CORE Discussion Paper No. 2006/29
21 Pages Posted: 4 Aug 2006
Date Written: March 2006
Hospital financing systems determine major decisions made by physicians and managers within hospitals. This paper examines the impact of the transition toward an activity-based reimbursement system that has emerged in most OCDE countries. We consider two initial situations, one for a private for-profit sector where both hospitals and physicians are paid on a fee-for-service basis and the other for a public sector under prospective budget and salaried physicians. For the private sector, our model focuses on the type of interaction (simultaneous, sequential or joint decision-making games) that should emerge between agents after the introduction of the activity-based financing system. In the public sector, the elasticity of the demand to the level of inputs seems to play a more crucial role in the transition.
Keywords: Hospital's financing system, Strategic interaction, Activity-based payment system
JEL Classification: I11, D4, D2
Suggested Citation: Suggested Citation