Hospital's Activity-Based Financing System and Manager-Physician Interaction

CORE Discussion Paper No. 2006/29

21 Pages Posted: 4 Aug 2006

See all articles by David Crainich

David Crainich

Catholic University of Lille - Faculté Libre des Sciences Economiques (FLSE)

Hervé Leleu

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Ana Mauleon

Université Saint-Louis - Bruxelles; Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE)

Date Written: March 2006

Abstract

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

Crainich, David and Leleu, Hervé and Mauleon Echeverria, Ana Carmen, Hospital's Activity-Based Financing System and Manager-Physician Interaction (March 2006). Available at SSRN: https://ssrn.com/abstract=921789 or http://dx.doi.org/10.2139/ssrn.921789

David Crainich

Catholic University of Lille - Faculté Libre des Sciences Economiques (FLSE) ( email )

60 Boulevard Vauban
Lille Cedex, 59030
France

Hervé Leleu (Contact Author)

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

Ana Carmen Mauleon Echeverria

Université Saint-Louis - Bruxelles ( email )

Brussels, 1000
Belgium

Catholic University of Louvain (UCL) - Center for Operations Research and Econometrics (CORE) ( email )

34 Voie du Roman Pays
B-1348 Louvain-la-Neuve, b-1348
Belgium

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