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Chalkley M, & Malcomson J, (1998)
‘Contracting for Health Services with Unmonitored Quality’
Economic Journal 108 (449), pp. 1093-1110
- Models the effect of different hospital payment systems on the quality
and volume of treatment.
- Assumes that the purchasing agency (e.g. the
NHS) cares about the number of patients treated, treatment quality
and cost, and the utility of hospitals.
- The purchaser can influence
hospital behaviour using 3 instruments. It can alter how hospital remuneration
changes w.r.t. (i) number of
patients treated, (ii) total cost of treating them, and (iii) number
of patients
demanding
treatment (whether or not they actually receive it).
- If treatment quality
has many dimensions, however, the purchaser does not have sufficient
instruments to achieve optimal quality of care in
all dimensions.
- Note that this is (at least implicitly) a monopoly model – no
competition among hospitals is assumed.
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