Ellis R, (1998)

‘Creaming, Skimping and Dumping:
Provider Competition on the Intensive and Extensive Margins’

Journal of Health Economics 17, pp. 537-555

• Theoretical paper modelling the effect of competition and differing payment systems on healthcare providers.
• Examines 3 different strategies a provider might adopt in response to different incentives:
  1. Creaming: over-provision of services to low cost patients.
  2. Skimping: under-provision of services to high cost patients.
  3. Dumping: explicit avoidance of high cost patients.
• The model involves two healthcare providers competing to attract patients.
• In this model cash-based reimbursement results in overprovision of services (creaming) to all types of patients.
• Prospectively paid providers cream low severity patients and skimp on high severity ones. If there is dumping of high severity patients, then there will also be skimping.
  

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