Payment contracts in a preventive health care system: a perspective from operations management

J Health Econ. 2011 Dec;30(6):1188-96. doi: 10.1016/j.jhealeco.2011.08.009. Epub 2011 Sep 3.

Abstract

We consider a health care system consisting of two noncooperative parties: a health purchaser (payer) and a health provider, where the interaction between the two parties is governed by a payment contract. We determine the contracts that coordinate the health purchaser-health provider relationship; i.e. the contracts that maximize the population's welfare while allowing each entity to optimize its own objective function. We show that under certain conditions (1) when the number of customers for a preventive medical intervention is verifiable, there exists a gate-keeping contract and a set of concave piecewise linear contracts that coordinate the system, and (2) when the number of customers is not verifiable, there exists a contract of bounded linear form and a set of incentive-feasible concave piecewise linear contracts that coordinate the system.

Publication types

  • Research Support, Non-U.S. Gov't

MeSH terms

  • Colorectal Neoplasms / diagnosis
  • Colorectal Neoplasms / economics*
  • Colorectal Neoplasms / prevention & control
  • Contract Services / organization & administration*
  • Contracts / economics*
  • Delivery of Health Care / organization & administration*
  • Health Services Needs and Demand / economics
  • Humans
  • Insurance, Health / economics*
  • Mass Screening
  • Models, Statistical
  • Preventive Health Services / economics*