Supplier discretion over provision : theory and an application to medical care

Suppliers who are better informed than purchasers, such as physicians treating insured patients, often have discretion over what to provide. This paper shows how, when the purchaser observes what is supplied but can observe neither recipient type nor the actual cost incurred, optimal provision differs from what would be efficient if the purchaser had full information, whether or not the supplier can extract informational rent. The analysis is applied to, among other things, data on tests for coronary artery disease and to Medicare diagnosisrelated groups defined by the treatment given, not just the diagnosis, illustrating the biases in provision that result.

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Year of publication:	2005
Authors:	Malcomson, James M.
Publisher:	Munich : Center for Economic Studies and Ifo Institute (CESifo)
Subject:	Gesundheitsversorgung \| Unvollkommene Information \| Kosten-Wirksamkeits-Analyse \| supplier discretion \| procurement \| public provision \| diagnosis-related groups \| medicare \| prospective payment \| cost-effectiveness

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Series:	CESifo Working Paper ; 1407
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	479306605 [GVK] hdl:10419/18771 [Handle]
Classification:	I18 - Government Policy; Regulation; Public Health ; I11 - Analysis of Health Care Markets ; H42 - Publicly Provided Private Goods ; D82 - Asymmetric and Private Information
Source:	EconStor

Persistent link: https://www.econbiz.de/10010261143